While the state has an estimated $31 billion surplus, questions persist about how California’s high tax rates have contributed to the surplus, and led to population decline with fewer housing and job opportunities.
“It's one of the reasons that demographic trends here in California, are very, very disappointing,” Jon Coupal, president of the Howard Jarvis Taxpayers Association (HJTA), told the Northern California Record. “And one of the reasons we lost a seat in Congress, because other states are growing and we're shrinking.”
Higher taxes are driving away businesses like Tesla, and many residents in the middle-class income bracket are choosing to move to Texas and other states with lower tax burdens.
“Higher taxes are one of the things that I think keeps people away,” Coupal said. “The answer is very simple – California needs to stop engaging in foolish fiscal policies, both on the revenue side and on the expenditure side.”
Coupal noted that reducing taxes and regulations means limiting government to its core functions.
In 1978, Proposition 13 passed at a time that there was a massive surplus in the state budget.
“In fact, it was called an obscene surplus, and I think we're right back there,” Coupal said, “This $31 billion is an obscene surplus at a time when working class Californians are struggling with heavy regulations, high unemployment, heavy taxes, and so I think the lesson for our elected leadership would be to find a way to lessen the tax load, and perhaps even return some of that money directly to the taxpayers.”
Using the surplus to pay down pension debt and other obligations also could provide Californians with benefits in the long term.
“To the extent that surplus revenue can be used to lessen the unfunded liability, that's a good thing,” Coupal said. “Paying down debt is a good thing to do, whether you are a state or local government or a family, if you suddenly come into some money, it's always wise to reduce your debt load as part of the mix of using those funds.”
And the Unemployment Insurance fund debt should be part of it, Coupal said.
“It would absolutely be a good thing for the California business environment to pay down the debt, because that is a cost being absorbed by businesses in California,” Coupal said. “Every tax burden is resulting in people and businesses leaving the state.”
Because it’s the taxpayers who are shouldering the burden of the state’s tax policies, Coupal said.
“California taxpayers created this surplus, and they created it because we have the highest income tax rate in America at 13.3%,” Coupal said. “We have the highest state sales tax rate in America. We have the highest gas tax in America, and we have one of the highest corporate taxes in America, so it's no wonder we've got a surplus revenue.”