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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