Despite Promises of No New Taxes, Businesses Face Billions In New Taxes In California
Facing record high deficits as the California state budget tries to maintain the record high spending of the lockdown era of 2020-22 despite not having nearly $100 billion in federal lockdown era revenue, Governor Newsom is using a series of tax code changes to raise over $6.5 billion in business taxes according to a Wall Street Journal analysis of the Governor’s budget proposal.
In 2021, over half of all revenue to the state government was paid by the top 1% of earners. Since the beginning of lockdowns in March 2020, California has lost over one million residents with a large percentage of those being ‘net’ taxpayers in that they pay more in taxes than they utilize in government services or infrastructure use.
““We have among the highest tax rates, as I noted, for corporate tax rates, we have to live within our means.””
While the overall $45 billion shortfall heralds the beginning of multiple years of predicted budget deficits, the Governor is proposing raising $6.4 billion in revenue by capping small job creating business tax credits on organizations that gross more than $1 million annually. The vast majority of the deficit will be resolved on paper through shifts in funding and delaying the timing of expenditures already in the current year budget or the proposed plan for 2024-25.
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