Taxes

Earlier today in Sacramento we delivered a letter signed by 500 members of the GFC Network in opposition to AB 699, a bill that would exempt ballot measures that authorize the issuance of bonds, impose a tax, or increase a tax with more than one rate from laws requiring ballots to disclose the amount of money to be raised and the rate and duration of the tax to be levied.

One of the reasons government unions in California are polling for opportunities to raise taxes was exposed earlier this week when State Controller Cohen issued a report that the state now has $95 billion of obligations to retired state employees for post-retirement healthcare, $10 billion more than the year before.

California’s government employee unions and other beneficiaries of government spending are pressing state legislators to enact a law that would obscure the costs of bond and tax measures.

Thirteen years ago, the California Chamber of Commerce and other big business organizations cut a deal with Governor Jerry Brown not to oppose a 30 percent temporary tax increase on individuals. Since then the state’s General Fund has extracted an extra $95 billion from individual taxpayers, including small businesses that pay business taxes at individual rates, and annual General Fund Expenditures have increased 165 percent.

In its first 10 years, California’s “temporary” income tax increase enacted 13 years ago extracted $75 billion of extra payments from taxpayers. Since then, two more tax years have elapsed, implying $95 billion of total extra tax payments to date.

13 years ago voters approved a seven-year increase in the top income tax rate. Sold as an education measure, the real reason was to cover up a tripling in annual school pension costs:

Believe it or not, California’s top income tax rate is scheduled to decrease by three percentage points after 2030 upon the expiration of a temporary tax increase, which started as a seven-year increase passed by voters in 2012 via a ballot measure entitled “Temporary Taxes to Fund Education” and was extended to 2030 by a subsequent ballot measure.

Often I’m asked whether California could levy a wealth tax on individuals. My answer is that, absent persistent political pressure by taxpayer advocates, the political door in California is always open to all forms of tax increases, including a wealth tax.

Second quarter income tax estimates are due Monday, though the amount required in California is more than a quarter’s worth of estimated tax. That’s because during a past budget crisis the state imposed a requirement that taxpayers pay more than a quarter’s worth of estimated taxes for each of the first two quarters of the year. That budget crisis went away, but not the imposition on taxpayers.

Yesterday the Legislative Analyst’s Office (LAO) released its Multiyear Budget Outlook through fiscal year 2026-27, forecasting $52 billion of deficits over that period.

A crypto billionaire who shelters his company from US taxes by housing it in the Bahamas is financing tax increase legislation in California.

We scratched our heads Friday when — despite a steep fall-off in the stock market and a first quarter contraction of the US economy — we learned the May Revision of the Governor’s Proposed Budget expects rosy tax revenues for the 2022-23 fiscal year commencing July 1. After reading the document, we learned how that happened:

Two social media and crypto executives are behind an initiative on the November ballot that would jeopardize steady funding for services financed by the General Fund and force state taxpayers to use after-tax dollars to fund what the sponsors and others like them could fund with pre-tax dollars.

Imagine you are responsible for projecting state tax revenues for the 2022-23 fiscal year commencing July 1. Here are some things you know:

Believe it or not, the ride-sharing company Lyft is sponsoring an initiative that would have taxpayers finance its fleets. Masquerading as a measure to address climate change and forest fires through additional taxpayer financing of electric vehicles, charging stations and fire suppression, the measure would add 1.75 percentage points to the state income tax rate — ie, a 13 percent increase in the top tax rate, already at 13.3 percent — applied to incomes of over $2 million per year.

Last year, California dramatically increased fire suppression spending to $1.5 billion.