Today is California Tax Freedom Day

Today is California Tax Freedom Day

“April is the cruelest month,” wrote T.S. Eliot.  It’s especially cruel for Californians because today, April 23, is the day when California taxpayers have collectively earned enough money to pay their federal, state, and local tax bill for the year, according to the Tax Foundation. After working for nearly four months to pay the government, we are now able to use what we’ve earned to pay for housing, food, life’s necessities, and perhaps a few of life’s niceties. If you compare our Tax Freedom Day to the rest of the country — Californians have to wait four days longer to control their own money compared to the national average, which is April 19.

In 2018, the Tax Foundation calculated that Americans will pay $3.4 trillion in federal taxes and $1.8 trillion in state and local taxes, for a total of $5.2 trillion, or 30 percent of the nation’s income.  In fact, America will spend more on taxes this year than it will on food, clothing, and housing.

Where does California stack up against the other states? At #41, we’re in the bottom 10.  Residents of New York (May 14), New Jersey (May 3), and Connecticut (May 3) have to wait until next month to be free of their tax burden.  Alaska and Louisiana (April 4), who bear the lowest average tax burden, are already free to spend their money on the things they need.

While there’s hope that future Tax Freedom days will come sooner thanks to the Trump tax cuts, Californians have little reason to be optimistic.  Progressive legislators in Sacramento are already hatching new ways to tax Californians.  The California Tax Foundation just released a new report estimating the costs to taxpayers of the bills and constitutional amendments introduced during the first year of the current 2017 – 2018 legislative session and from January 1 to March 2, 2018.  These 33 bills would increase taxes and fees by more than $269 billion annually, despite the expected state budget reserve of $13.5 billion.

For Americans, April can be cruel, but unfortunately for Californians, we could expect May Gray and June Gloom to be looming around the corner.

Below are just some of the tax hike bills being tracked by the California Tax Foundation:

ACA 22, Kevin McCarty (D)

“Middle Class” Fiscal Relief Act. Increases California’s 8.84 percent corporate tax rate, already one of the highest in the nation, to 18.84 percent, which will encourage companies to leave the state and discourage companies from expanding or relocating here.

SB 1398, Nancy Skinner (D)

Increased Tax Rate.  Threatens to significantly increase the corporate tax rate on publicly held corporations and financial institutions up to 15 percent according to the wages paid to employees in the U.S., and threatens to increase that rate by 50 percent thereafter, if the corporation or institution reduces its workforce in the United States and simultaneously increases its contractors.

SB 993, Robert Hertzberg (D)

Sales Tax on Services. This bill would expand the Sales and Use Tax Law to impose a tax on the purchase of services by businesses in California at a specified percentage of the sales price of the service.

Rowena Itchon is Senior Vice President at 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.