It’s Taxfest in Sacramento

It’s Taxfest in Sacramento

Will Rogers said, “The only difference between death and taxes is that death doesn’t get worse every time Congress meets.” But Rogers never came up against the current California legislature, which these days isn’t just holding a legislative session but an all-out Tax Hike Convention.

Today, the state enjoys a $21.4 billion surplus, and the zeal to spend that surplus and a whole lot more has Sacramento in a partying mood. Instead of red, white, and blue balloons falling from the rafters, it’s taxpayer greenbacks.  I recall that last year PRI’s Tim Anaya warned that there was a lot of pent up demand in the legislature thanks to years of Gov. Jerry Brown holding the line on spending. Now that pent-up demand Tim was talking about seems have erupted to the magnitude of Mount Pinatubo. Here’s just a sample:

Senator Pat Bates wrote in the Orange County Register that the Democratic legislators have already proposed $40 billion in new spending, much of which is above and beyond what the governor has already proposed.

Then there are the big-ticket ideas: universal pre-school ($2 billion annually) and universal health care (a whopping $400 billion annually). These programs would require major sources of funding.  So far, the only thing on the table is the split roll initiative, which would modify Prop. 13 to establish a tax to assess commercial and industrial property at market value.  A split-roll tax is estimated to pull in between $6.5 billion and $10.5 billion a year.

We suspect that Californians are not feeling particularly generous during this tax filing season as they face the $10,000 limit on their state and local tax deductions.  A high tax state, the share of California taxpayers taking SALT deductions in 2016 was 35 percent, at an average deduction of $18,770 according to the National Association of Realtors.  And the 35 percent aren’t all rich.  For example, 41 percent of Californians making $50,000 to $75,000 took a SALT deduction and 62 percent of state residents making $75,000 to $100,000 also took a deduction.

“Having to vote on an endless series of taxes is political malpractice,” said Steve Maviglio to Judy Lin of CALmatters.  Maviglio is a Democratic consultant who is against the soda tax and who we’ve interviewed on PRI’s Next Round podcast.

Someone ought to be the skunk during Taxfest, so here’s a reminder compiled by CalTax of where California ranks with the rest of the nation when it comes to taxes:

  • Highest sales tax in the nation.
  • Gas tax: second highest in the nation.
  • Personal income tax: highest top rate in the nation.
  • Corporate income tax: highest in the west.

Rowena Itchon is senior vice president of Pacific Research Institute. 

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.