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California politicians eye huge hike in corporate taxes in response to federal tax reform

California politicians eye huge hike in corporate taxes in response to federal tax reform

“Middle Class Tax Justice” is another salvo against President in state’s “War on Trump”.

Just before Christmas, President Donald Trump signed the Tax Cuts and Jobs Act that has set America’s economy on a trajectory to prosperity and put wealth back in the hands of its citizens.

The new rules also substantially reduced the country’s corporate tax rate to 21 percent, down from a fairly hefty 35 percent. Now, a pair of California Grinches are offering a bill that would ultimately divert some of the federal savings back into Sacramento coffers.

In perhaps the most magnificent example of irony I have ever seen, the two Democratic assemblymen are referring to their proposal as “Middle Class Tax Justice“.

Democratic Assemblymen Kevin McCarty of Sacramento and Phil Ting of San Francisco announced Thursday that they will pursue a constitutional amendment to add a surcharge on large companies that do business in California, potentially raising billions of dollars to expand social services for Californians.

“We’ve seen enough billionaire justice from the presidency,” McCarty said in an interview. “It’s time for middle class tax justice.”

McCarty’s and Ting’s money-grabbing proposal creates a new tax for businesses in California that would have companies with annual net income of more than $1 million in the state pay an additional surcharge of 7 percent (half their savings from the recent federal tax cut).

The only saving grace is that a vote to pass the measure would require a super-majority, which is no longer the case…thanks to the #MeToo movement.

Democrats lost their supermajority following resignations of two Assembly Democrats, Matt Dababneh of Encino (Los Angeles County), and Raul Bocanegra of San Fernando Valley (Los Angeles County) amid sexual misconduct allegations.

Another Assembly Democrat, Sebastian Ridley-Thomas of Los Angeles, resigned citing health issues. In the Senate, Democrat Tony Mendoza of Artesia (Los Angeles County) is taking a leave of absence pending an investigation into sexual misconduct allegations.

Even if it measure makes its way through our legislature, as a constitutional amendment, it would have to pass muster with the voters in June. I suspect that in 6 months time, the economic health of the other 49 states will offer a persuasive case for Californians to vote “No”.

Clearly, this is another stunt showing the desperation of the state’s progressive leaders to deal with the consequences of the Trump tax plan. Legal Insurrection readers may recall that the state’s senate is trying to do an end-run around the loss of certain tax deductions, by designating a state fund as a “charity”.

Sacramento’s leaders are clearly concerned about a potential even more of an exodus of taxpayers than there has already been.

That fear animates Senate President pro tem Kevin de León’s bill that would allow California residents to write off their state taxes on their federal returns as a charitable deduction, as well as other proposals that Assembly leaders have hinted they’re preparing to offer. De Leon’s bill cleared a second committee this week and is on its way to a vote on the Senate floor. Trump administration officials say it won’t pass muster with the IRS.

Democratic state lawmakers are worried because California relies so heavily on the income taxes it collects from high earners to fund government services. The state’s wealthiest 1 percent, for instance, pay 48 percent of its income tax, and the departure of just a few families could lead to a noticeable hit to state general fund revenue.

…“The new tax law is kind of like icing on the cake for some who were thinking about moving out of the state,” said Fiona Ma, a Democrat on the tax-collecting Board of Equalization who is running for state treasurer. “If they don’t have to stay here because of work or family, it doesn’t give them a lot of incentive.”

Should the corporate tax measure pass, even more Californians will head out-of-state to seek real middle class tax justice.


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Fluffy Foo Foo | January 21, 2018 at 1:39 pm

Well this is awesome. Maybe even awesomesauce.

Maybe the next King of Kalipornia will abandon the train to nowhere to fund a FENCE around the state to prevent the plantation slaves from leaving? E. Germany redux? Or institute an EXIT TAX equal to ten years of tax payments? Who knows what the tax leeches will come up with.

    I’m betting they’ll start charging an “exit fee” for high earners who leave. If they pass a new 7% corporate surcharge tax who knows how damaging that could be.

What a wonderful idea! I can’t imagine a better way to convince corporate boards to pack up and move their operation to a low-tax state. Their employees will also be paying more of their income in taxes.
I moved to California 43 years ago. Democrats have been systematically and deliberately destroying this beautiful state ever since.

    stevewhitemd in reply to Topnife. | January 21, 2018 at 6:07 pm

    It’s not just moving the HQ and all the physical plant, it’s also about not doing business in California. A big company (e.g., Ford, or IBM, or Bayer, or Amazon, or Prudential) would have to decide not to sell products and services to people in California. That’s a very big step for them.

    Smaller businesses, on the other hand, could easily decide not to sell to anyone with a California address. And while they’re at it, they could just as easily decide not to buy from anyone with a California address.

    It would only take a 5 to 10% decrease in business to put the screws to Laficornia.

…a constitutional amendment to add a surcharge on large companies that do business in California…

And if they stay there, it will be a surcharge on large, *dumb* companies that do business in California.

I’m an ex-pat Californian who now sells real estate in Boise, ID. Give me a holler if you’ve had enough.

    I’m an expat from California who owns a real estate company here in Sparks, NV. Great prices here, compared to California. Come try it, no state income tax, lots of entertainment, lots of shopping, not so congested.

Speaking as a Texan, whose state benefits greatly every time another California business relocates – Yes, California, Do It! Please! Nothing bad will happen to your revenues, there won’t be any unforeseen consequences, you have our word on it!!!

    94Corvette in reply to Tom Servo. | January 21, 2018 at 3:19 pm

    Hate to break it to you but when a Californian moves to Texas, it turns our red state a little bluer. Bad enough we have Austin/Houston/Dallas to screw things up and any more will definitely dilute what is special here. They messed it up there, let them stay there and ‘enjoy’ the fruits of their insanity.

      alaskabob in reply to 94Corvette. | January 21, 2018 at 3:30 pm

      They want to be Texans, or Idahoans … or.. or… but they want their cushy little this and thats which spawn the slippery slop. Just how many of those recent immigrants to Texas actually own cowboy boots? Know what tack is or can figure out which is what end of a horse? Can they answer basic questions of Texas history?

        redc1c4 in reply to alaskabob. | January 21, 2018 at 5:26 pm

        i don’t own any cowboy boots. since i’m not in the Army anymore, i rarely wear boots of any kind.

        i know what tack is, and which end is which on a horse, and know a little Texas history.

        however, once my new neighbors help me unload the safes and the reloading gear, and answer my questions about local ranges & guns stores, over alcohol, they are likely to be re-assured i’m an AOSHQ Moron, and not an idiot.

          Tom Servo in reply to redc1c4. | January 21, 2018 at 6:49 pm

          welcome to Texas, fellow moron!!! As Lyle Lovett sang, “I know you’re not from Texas, Texas wants you anyway!” The people who have the grit and gumption to relocate are the people any state wants, because that is hard work any way you cut it. The ones who want to live off the state will stay in Cal, and that’s how it should be.

          alaskabob in reply to redc1c4. | January 22, 2018 at 2:37 pm

          1) I bet you will own a pair someday. I like my Mercedes.
          2) The magic words “safes” is a comforting thought that you probably know that ATF means fine adult beverages, fine tobacco (for those that like the stuff) and fine firearms and NOT an agency with a “Bad ATtitude about Freedom”.
          3) But if Texas goes any bluer… Alaska will split itself into two states and make Texas the third largest state.

In the end, after all the dust is settled ,it’s people buying products in the marketplace that are the true source of these revenues, not the corporations.

    Crlos3 in reply to maxmillion. | January 21, 2018 at 5:28 pm

    Pure nonsense. If there is no employment then there is little to no money to buy anything. Those that have anything left will also soon be gone. Then what will you have? Given time I think CA will prove this scenario. Moonbeam is just as ignorant now as when he wouldn’t spray a small area to kill the flies and ended up spraying multiple counties.

Taxes are the opiate of the Left.

It‘s the people‘s own damn fault California is the way it is now. If they had not believed the horses*t the DemocRATs spouted to get elected in the first place, they would not have to pay 50% or better in taxes. BTW where are the taxes which are supposed to be collected from Hollywood? I‘ll tell you where they are — back into the pockets of the studio heads

    Close The Fed in reply to Stan25. | January 21, 2018 at 8:02 pm

    Re: Stan25

    That’s a damn untruth. The TRUTH is Californians REPEATEDLY voted to stop the insanity in its tracks, and JUDGES kept overturning their votes. REPEATEDLY.

    Usurping judges have made California a mess, not its citizens.

Hopefully they don’t even have to pass the amendment, maybe the mere idea will give corperations pause when it comes to staying in California!

How thinks Apple will invest more in California? HA

    randian in reply to Merlin01. | January 21, 2018 at 9:28 pm

    An extra 7% tax on Apple’s profits is more than what they spent on their new corporate HQ in Cupertino. It would make leaving California and abandoning a mere 2 billion dollar HQ an easy choice to make. Of course they won’t, because Tim Cook is a progressive through and through.

Let them increase their taxes and reap the benefits of large employers leaving their state.

” I suspect that in 6 months time, the economic health of the other 49 states will offer a persuasive case for Californians to vote “No”.”

you give the idiots who live here WAY too much credit…

i’ll be amazed if it DOESN’T pass.

because #Failifornia.

I just love it, in 49 states corporations and businesses get a tax break from the federal government, and because of it gets a higher tax bill from a state where they are already paying the highest tax rate in the USA. What better incentive to move their corporations and businesses from California, in order not to have to pay the higher tax rate, to another state where they’ll also be paying a lower tax than they have been paying in the state of California, and not have to pay this extra 7% tax penalty for the tax cut from the federal government, now a double tax saving as an incentive to move.

    ConradCA in reply to Randy131. | January 21, 2018 at 8:28 pm

    If you read more carefully you will see that the tax is only on business done in CA.

      Randy131 in reply to ConradCA. | January 22, 2018 at 6:17 am

      I understand that. Because of President Trump’s tax cuts for corporations and businesses, California is going to add a new 7% tax to their already highest state tax on corporations and businesses, giving California corporations a new double incentive to move out of California, in order to keep the whole tax break they’re getting from President Trump’s new tax break, and get away from California’s already highest corporate and business taxes in the nation. This is a double incentive for California’s corporations and businesses to move to another state and keep all of President Trump’s tax cuts, and get a lesser state tax than what they’ve already been paying in California.

Are businesses going to be able to charge Californians extra because of the 7% tax?

Think about it, this will make the corporations and businesses in California to not be able to afford to give the poor and middleclass Americans the same bonuses and raises that they are giving the same to in all the other 49 states, making the new California tax law a detriment to those Californians who will now not receive what is being given to the poor and middleclass Americans in the other 49 states.

Subotai Bahadur | January 21, 2018 at 8:16 pm

Let them. It is not like they are really part of America anyway. Tariff rates should apply to all transactions between America and California. Especially on all forms of energy and water.

7% plus current 8.84% (don’t ask me where CA legislators got that number) = 15.84% marginal tax rate in California. If that doesn’t drive large employers out of California nothing will.

Very Obama-like. Retributive change.

People in other parts of the country should write to the politicians in California and encourage them to follow through with this plan so that, hopefully, companies will leave and take their jobs to the other 49 states.

Tax increases will move coporations out of state increasing unemployment,. Can’t those stupid politicians see what their tax and spend policies create poverty? By the way I live in Illinois and all our surrounding states have a political ad thanking us for driving our business out of our state and into theirs.

The problem with CA is it is a corrupt organized crime state, much like New York and Illinois. The reason the politicians are so desperate to continue the human trafficking (also known as illegal immigration) is that it funds the coffers of the wealthy with cheap labor, who fund the politicians.

The trafficked labor is paid below living wages and then supplemented by the taxpayers. It’s win-win for the rich. They get to pay them below a living wage and let the middle class people in all 50 states pick up what they don’t have to pay.