It’s never enough for tax-giddy California legislators.
California taxpayers are so generous they will be funding a state budget of $300.7 billion. That’s according to the figure in Gov. Gavin Newsom’s May Revision of his budget proposal for fiscal year 2022-23, which begins on July 1. That includes an incredible surplus of $97.5 billion, by itself more than the entire budgets of 45 other states.
Yet on May 31, the California Tax Foundation came out with its latest (pdf) annual “Tax and Fee Report: Major Taxes and Fees Introduced in the California Legislature.” It uncovered 64 proposals, of which 51 are too difficult to figure out. But 13 laws, if all were enacted, would increase taxes and fees $195 billion a year. The two worst:
ACA 11 is by Assemblyman Ash Kalra (D-San Jose). In the bill’s language, it would “adopt a statutory program of comprehensive universal single-payer health care coverage and a health care cost control system for the benefit of every resident of the state.” That is, it would impose socialized medicine.
The cost: $162.8 billion a year in new taxes—for starters. But that would be on top of the $202.8 billion a year already spent on state and federal health programs, such as Medicare and Medi-Cal. Total: $365.5 billion a year for total state control of all health care.
Notice the bill’s wording of “a health care cost control system,” which means rationing. The state government would determine what kind of health care you and your family get. And if you don’t like it, too bad.
A big immediate problem would be interfacing with existing federal programs, including not just Medicare and Medicaid (Med-Cal here), but the Veterans Administration, care for active-duty military families and programs for federal employees.
ACA 11 would set up a new bureaucracy, the CalCare Trust Fund. It would increase taxes on all incomes above $149,509. The highest rate would be 2.5 percent for those making $2,484,121 and above. That means the top state income tax rate would rise to 15.8 percent, by far the highest in the country. On top of the 37 percent top federal income tax. Total income tax: 52.8 percent. Which would be an even greater incentive than already exists for rich people to leave.
AB 2289/ACA 8 is by Assemblyman Alex Lee (D-San Jose). It’s a “wealth tax” of $22.3 billion. It would raise taxes not on income, but on the valuation of “a resident of this state’s worldwide net worth.” If a person only had a home here, but billions of net worth in other states or even countries, the valuation would be taxed here. The top rate would be 1.5 percent on $1 billion of wealth.
No wonder Elon Musk left California. His current net worth of $218 billion would mean he would have to pay $3.3 billion a year just to exist.
An obvious problem is “worldwide” includes countries with less exacting accounting standards than those in America. How does one value assets in Ukraine, Russia, Ethiopia, Somalia or other countries at war? What about countries with which the United States has strained relations, such as Iran and the People’s Republic of China?
On May 24, YJ Fischer, Director, Office of International Affairs at the Security and Exchange Commission, discussed this in his speech, “Resolving the Lack of Audit Transparency in China and Hong Kong: Remarks at the International Council of Securities Associations (ICSA) Annual General Meeting.”
He said, “I would like to focus on the recent regulatory developments related to the lack of US inspections of audits and investigations in China and Hong Kong, and the implications for continued trading of China-based issuers on US exchanges. For more than a decade, local authorities in those jurisdictions have hampered the Public Company Accounting Oversight Board’s (‘PCAOB’) ability to obtain audit work papers and interview audit engagement personnel as statutorily mandated. This situation is untenable because, among other things, it exposes US investors to significant risks.”
Should Californians go to jail because they can’t maneuver in the maze of inadequate accounting in China?
It’s also strange that both Kalra and Lee hail from San Jose in Silicon Valley, the epicenter of the global eruption of wealth from the internet the past three decades. In some strange twist on Karl Marx’s “Das Kapital,” extreme wealth seems to generate its own negation, socialism.
Marx himself wrote in a London described by his near contemporary and fellow immigrant Joseph Conrad: “The air was dark above Gravesend, and farther back still seemed condensed into a mournful gloom, brooding motionless over the biggest, and the greatest, town on earth … spread out in the tranquil dignity of a waterway leading to the uttermost ends of the earth.”
That’s from the beginning of “Heart of Darkness,” published in 1899. Shortly after, the United Kingdom fell into the socialism of higher taxes and hyper-regulations. Its greatness evanesced into Conrad’s “mournful gloom.”
Perhaps that is California’s fate as well. Even if these tax increases go nowhere this year, they are bound to return in the future. The billionaires, businesses, and jobs already are heading for Texas and Florida, or out of the country altogether, on Boeing 737s to the uttermost ends of the earth.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.