There’s a certain type of architecture from the mid-20th century called “California Crazy.” Think of a donut shop shaped like a big concrete donut or a restaurant shaped like a hat. That kitschy programmatic architecture defined Southern California life in the middle of the last century.
Here’s an example:
These days “California Crazy” has a new meaning all its own — the policies of a left-wing state that seems to be drifting ever leftward. Citizens of the Golden State pay anywhere between 1% and 12.3% in taxes, depending on residency, income, and filing status, according to NerdWallet.
And those tax rates might get even higher.
There’s a constitutional amendment in front of the state legislature that would raise taxes astonishingly higher to fund the first single-payer healthcare system in the U.S.
Jared Walczak of the Tax Foundation broke down what the taxes would entail:
The new taxes would take three forms:
1. Surtaxes atop the current individual income tax structure beginning at $149,509 in income;
2. A graduated-rate payroll tax system with the top rate kicking in for employees with more than $49,990 in annual income; and
3. A gross receipts tax of 2.3 percent, excluding the first $2 million of business income.
There are some catches in this proposal, and they’re notable.
For starters, the payroll tax doesn’t apply to companies with fewer than 50 employees. At that 50th employee, the massive taxes hit hard.
Imagine, for instance, the overly simplified hypothetical of a company with 49 employees making $80,000 each. At 49 employees, the company has no payroll tax burden. Hiring one additional employee generates a tax bill of $90,000—more than that employee’s salary!
Needless to say, this disincentivizes small business growth.
The corporate gross receipts tax hurts even successful businesses with low profit margins, like grocery chains, and it’s disastrous for businesses operating at a loss.
The surtaxes also punish married taxpayers and make an already complicated system of tax brackets even more convoluted.
But it gets worse. The amendment makes it easier for California’s legislature to burden the state’s citizens with even higher taxes.
These taxes, moreover, could be increased by simple majorities in the legislature, as the bill exempts the three new taxes from the constitution’s supermajority requirements for tax increases. If a future legislature decides that doubling the state’s tax collections was insufficient, the constitution’s supermajority requirement would not stand in its way.
On Twitter, users are attacking Walczak with the narrative that taxes are higher in Texas for the middle class than in California. Walczak destroys that myth.
Common claim: “For the middle class, Texas’s taxes are higher than California’s.”
— Jared Walczak (@JaredWalczak) January 7, 2022
What’s even more mind-boggling about this potential tax grab is that the state’s own Legislative Analyst’s Office is predicting a $31 billion surplus for the fiscal year.
Of course, that whopping surplus isn’t enough to pay for universal health care for Californians. Estimates show that it would take $400 billion to achieve that lofty goal. The state is counting on the federal government to pony up for half of that figure, so California is looking to scare up the remaining $200 billion. Hence the unbelievable tax increase.
Given what the state legislature wants to do to Californians, don’t you think it’s crazy that people still choose to live in the Golden State?