Lawmakers propose big tax increases

California lawmakers proposed more than $196.3 billion in tax and fee increases this legislative session, the California Tax Foundation reported this week. State legislators are clearly still wrongly of the view that what ails California government is not enough money.

“During the first five months of the 2023-24 session, California lawmakers considered more than $196.3 billion in new taxes and fees, including a `wealth tax,' a government-run health care system that would require hundreds of billions of dollars in new taxes, a tax on oil company earnings, a corporate tax increase that would make California's rate the highest in the nation, and numerous fee increases,” CalTax reports.

The bulk of this, $162.8 billion, comes from Assembly Bill 1690, which calls for such a big tax increase to help California create a single-payer health care system.

For context, the total state budget proposed by Gov. Gavin Newsom is around $300 billion when all funds are included.

Some more context makes clear that the state does not need additional revenue. In 2017-18, the total state budget was $183,256,293. In other words, without some major new tax hike in that time, the state has had massive increases in the amount of money it has to work with.

Tax increases are not necessary. What matters is how state lawmakers use the plentiful money they have.

Californians have consistently signaled, most notably with their rejection of an attempt to gut Proposition 13 in 2020, that they don't think they need to pay more taxes. And they're right.

Also this week, the nonpartisan Public Policy Institute of California released survey results showing relatively little enthusiasm for even the most superficially palatable type of tax increase.

PPIC asked Californians if they “favor or oppose raising the state taxes paid by some of the largest California corporations.” It's a question sufficiently vague enough that one could imagine little sympathy for presumably big, wealthy nameless corporations.

Yet among all those asked, 47% of Californians said they favor such an idea, but 51% said they opposed it, including a solid majority (56%) of independents.

The figures did change a little among likely voters, with 50% saying they would support such a tax increase versus 48% opposed. While slightly more pro-tax, it's not a great starting point for any tax increase, especially once the negative tradeoffs are discussed and voters are reminded that taxes on businesses are ultimately passed on to the consumer.

These same likely voters, though, were notably strongly opposed to other types of taxes. Namely, PPIC asked them how they would vote on a local parcel tax to raise more money for local public schools. Just 43% said they would vote for such a proposal, versus 56% opposed. Even 39% of Democrats said they would vote against such a tax increase, compared with 86% of Republicans and 59% of independents.

Californians across the political spectrum recognize they are paying more in taxes than they should. State lawmakers need to focus on making effective use of the money they have before asking for more from overtaxed Californians.