California hoping to make businesses cough up half of their tax cuts

This story popped up a couple of days ago but we’re only just getting around to it now. The central theme of the state government in California these days is fairly obvious: #RESIST Trump. Basically, anything the President is in favor of they need to oppose and reverse if possible. But the one thing you’d expect them to keep their hands off of would be a federal tax cut, right?

Don’t be silly. Since it was a GOP idea, no matter how massively popular it’s been with the voters, the tax cuts must be opposed. But they can’t do anything about it because it’s a federal law, or so the theory goes. Never fear, citizens. The state legislature has figured out a way around that pesky little problem. Now that the corporate tax rate has been slashed, the Golden State wants to “claw back” that money by confiscating half of the savings the corporations would have realized under the new rates. (Fox News)

Calling the Trump administration’s tax reform plan a “middle-class tax increase,” two California lawmakers introduced a bill that would force large companies to fork over half of their expected saving to the state.

Assemblymen Kevin McCarthy and Phil Ting, both Democrats, introduced Assembly Constitutional Amendment 22, which calls for a 10 percent surcharge on companies with a net earnings over $1 million. The plan could potentially raise billions for the state’s social services programs.

“It is unconscionable to force working families to pay the price for tax breaks and loopholes benefiting corporations and wealthy individuals,” Ting said in a statement, according to The San Francisco Chronicle. “This bill will help blunt the impact of the federal tax plan on everyday Californians by protecting funding for education, affordable health care and other core priorities.”

We should probably start by pointing out that the Kevin McCarthy in this story is a different person than that other Kevin McCarthy from California who serves as the House Majority Leader. Two very different people in many, many ways.

By this point, it should be clear that all of that word salad they served up about the tax cuts and the effects they may have on California’s citizens is nonsense. As we discussed here previously, the only negative impact coming out of it will be the loss of part of the SALT deductions which can be taken by Californians earning a minimum of well over $150K. And even if they earn a quarter million the impact will be minimal. It’s further worth reminding them that the only reason their higher earners are in this boat to begin with is that California’s state taxes are astronomical. Also, giving “breaks” to corporations (read: employers) doesn’t affect California’s bottom line at all since we’re only talking about federal taxes.

The underlying reality here should be shocking to anyone who doesn’t actually live in California or New York. The federal government made a change to the tax code which would allow businesses to pay a lower rate, thereby saving them some money. The state of California wants to make sure that nobody pays lower taxes (even though the money isn’t coming out of their coffers) so they’re going to try to confiscate the savings. This is, to put it in the simplest terms possible, highway robbery, only using the legislative pen rather than a gun.

At some point, you have to ask why anyone puts up with all of this and keeps doing business in California. The mask has been fully pulled away this month and business owners should be forced to face up to the facts. Their own state government pretty much hates them and will take any opportunity possible to rip them off. There are so many more business friendly states out there where they would probably flourish.

Of course, there’s always one other option. Maybe that “New California” idea isn’t so bad after all.