Amid $75.7bil surplus, Calif. Democrats seek $234.5bil in new taxes

Gov. Gavin Newsom is spending much of the week touting a hefty surplus. That isn’t stopping his fellow Democrats from seeking hundreds of billions in new taxes from Californians.

While California Gov. Gavin Newsom is talking up the state’s historic $75.7 billion surplus – of which $38 billion is deemed to be a discretionary surplus – as the predicate for a $100 billion budget revision, California Democratic lawmakers are actively seeking a bevy of tax hikes.

State legislators have proposed $234.48 billion in new taxes and fees over the first few months of the year, even as the state has reported the eye-popping surplus. 


New taxes include income tax increases, business tax increases and a wealth tax, which would be the first in the nation, according to a report compiled by the California Tax Foundation, a nonprofit that conducts independent nonpartisan research on the state’s revenue. 

“With California’s economy targeted to reopen June 15 after a one-year shutdown to mitigate the spread of COVID-19, an increase in economic activity is likely to continue providing more revenue to fund government programs without any change in the existing tax rates,” the report reads. 

It will be up to the legislature to decide whether or not to raise taxes in spite of the state’s surplus and the likely increase in economic activity. 

Three taxes make up the vast majority of the proposed increases. 

First up is the health care for all proposal, coming in at $200 billion annually over a two-year period. Assemblyman Ash Kalra (D–San Jose) proposed the single-payer health care program. 

The wealth tax comes in second, totalling a $22.3 billion cost for taxpayers. Alex Lee, another Democrat Assemblyman from San Jose, is behind the bill that would tax art, collectibles, retirement funds, farm assets and stocks, among other assets. 

Taxpayers with a worldwide net worth greater than $50 million would pay a 1 percent tax, and individuals with a net worth greater than $1 billion would pay a 1.5 percent tax. 

Third highest is the personal income tax increases – proposed by Asm. Miguel Santiago (D–Los Angeles) – would see the top state personal income tax rate increase to 16.8 percent from 13.3 percent. 

Other notable proposed taxes include the following: 

  • AB 14, $150 million: The bill would impose a tax on telecommunications services, which would fund the expansion of broadband access across the state. Revenue would be used for one-time infrastructure, but the tax would continue in perpetuity. 
  • AB 71, $950 million: The bill would increase business taxes to fund homeless housing services and programs. 
  • AB 270, $542.6 million: All Californians who pay for phone services would pay a tax to fund the creation of a suicide prevention hotline. 
  • AB 988, $542.6 million: The bill would tax purchases of new phones to fund a suicide hotline. 
  • AB 1199, $1 billion: The bill would establish an annual excise tax of 25 percent from rental income, and it would be imposed on taxpayers who own 10 or more properties. Revenue would fund rental assistance, eviction legal services and homeless programs. 

There are also 43 proposals that do not have a known cost yet, including the following: 

  • AB 45, Industrial hemp products fee
  • AB 294, Tow truck fee
  • AB 501, Cremation fee
  • AB 584, Fee for hauling milk
  • AB 702, Fee for breeding small animals
  • AB 707, Tax on thermostat manufacturers
  • AB 842, Plastic recycling fee
  • AB 1223, Firearms tax
  • SB 50, Fee for preschool
  • SB 220, Fee on direct shipping by craft distillers
  • SB 470, Fee for combined hunting and fishing license
  • SB 517, Fee for shipping beer
  • SB 620, Fee for shipping beer and distilled spirits

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