Even as the state last week unveiled a record setting budget, it’s raising questions about how proposed tax increases, including a new state-run healthcare system funded by business revenue, could further deter California’s business development and population growth.
Despite the budget surplus, the tax proposals would recklessly burden businesses and residents already struggling to recover from the COVID-19 economic downturn, Jon Coupal, president of the Howard Jarvis Taxpayers Association (HJTA), told the Northern California Record.
“They've got bills that create a system for single-payer health care, but they don't have a way to fund it; the funding is in a proposed constitutional amendment, ACA 11,” Coupal said.
So while legislation could be passed, whether to fund it could be up to voters, which likely would be a hard sell, Coupal said.
“And this is not a Republican versus Democrat or Liberal versus Conservative issue, these massive tax increases will accelerate rapidly the flight of individuals out of the state of California,” Coupal said.
According to the Center for Jobs & the Economy list of “CaliFormers,” more than 440 companies have moved some or all of their operations out of California since 2018.
In addition to prohibitive taxes, Coupal noted state management of high-speed rail, the DMV, the EDD, and even the Department of General Services provide some examples of poorly executed state systems.
Especially in view of the projected $31 billion surplus, the state has an opportunity to lower taxes and pass effective reforms, or the money might be used for special interests.
“We'd like to see transportation dollars go to fix roads and bridges – that's what it should be there for – and we'd like to see education dollars go to actually educate kids and not indoctrinate them in critical race theory and not being used to shore up the teachers’ unions,” Coupal said. “So we'd like to see reforms and lower taxes – and incentivize the business community to stay here.”
Coupal noted businesses are receiving tax credits, and the new budget does provide for paying down some of the $23 billion in Unemployment Insurance (UI) fund debt.
“But I'm not sure that's sufficient to keep a lot of these companies here,” Coupal said. “I mean every day there are more companies moving out of state.”
Meanwhile, the growing pay gap has further eroded the number of middle-income families in California.
“It’s not just the businesses – it’s individuals; the middle class find it very difficult to live in California,” Coupal said. “We have the highest poverty level and some of the richest people in the nation, so you have this huge divide between the rich and the poor, and the middle class is gutted.
“Now this is ironic, given the fact that the Democrats claim to be the party of the middle class, but we're finding out that is exactly opposite of reality.”