In the first four months of the 2017-18 legislative session, California lawmakers introduced $155 billion in higher taxes and fees – a staggering amount that will give pause to every business owner when considering expansion, and cause families to reflect on California’s affordability.
This week, the California Tax Foundation released the third edition of Tax Watch: Major Taxes and Fees Introduced in the California Legislature, a report cataloging all legislation introduced since the start of the legislative session in December that proposes a new or increased tax or fee.
The cumulative sum of these proposals is the highest we’ve ever identified. These proposals seek to increase the price of the most basic necessities – housing, health care, child care, groceries and driving a car. From a business perspective, these bills would make it costlier for start-ups, family businesses, neighborhood restaurants and California’s industry icons to keep their doors open.
Since January, 17,687 Californians have lost their jobs due to business closures or downsizing. The state Employment Development Department reports that the businesses that have notified the state they may reduce their workforce include: Advanced Call Center Technologies, Aerojet, Alaska Air, AOL, Bebe, Boeing, Carl’s Jr., Coca-Cola, Diamond Foods, Fitbit, Gap, Google, Live Nation, Macys, Morton Salt, National Steel and Shipbuilding Company, Nordstrom, Northrop Grumman, Oracle, Payless, Sears, Shutterfly, Technicolor, United Launch Alliance and Western Digital.
It is no secret that California has costly regulations, a litigious atmosphere and a high tax burden. Legislative leaders often dismiss these complaints and point to California’s economic output and job growth – and to be fair, the state has had net job gains. But how much better would the state job’s climate be without the job losses that wipe out too many of the gains?
Many of the proposals identified in Tax Watch may never become law, but even an empty threat of gutting Proposition 13 protections, taxing foreign income, expanding regulatory fees, etc., is enough to stifle investment and expansion by creating uncertainty, and promoting the perception that California is hostile to business.
Legislative leaders are uniquely poised to improve California’s reputation, and to make the state friendly to new businesses and jobs. As policy deliberations continue in the Capitol, it will be the role of the supermajority to thoughtfully weigh the merits of pro-growth tax reform vs. tax policies that would stifle economic growth.
Throughout the legislative session, Tax Watch will be updated with information on any additional tax and fee policies that are proposed, and with status updates on all the measures in the report. We hope Californians will use this important information to stay informed, so they can be active participants in discussions about possible changes to our state’s tax structure.