Democrats in Sacramento have sent a budget to Gov. Gavin Newsom’s desk that includes two massive tax increases.
The California Taxpayers Association estimates that in sheer dollar terms, these two tax hikes amount to the “largest tax increase in state history.”
The first raises the tax on private health insurance premiums.
Until now, state taxes had actually been higher on public health insurance (Medi-Cal) premiums. But no one noticed, because that money was reimbursed by the federal government.
As Jon Fleischman points out, that scheme allowed California to spend lavishly on Medi-Cal, and send Washington the bill.
But President Donald Trump and Republicans in Congress decided that the rest of the country should not fund California’s public health spending spree on illegal immigrants, housing, food — and able-bodied people who don’t want to work or volunteer.
One result is a new rule that states have to tax public and private health insurance at the same rates.
The obvious solution is for California to cut Medi-Cal spending — or to find the money by cutting other programs.
That’s the last thing Democrats want to do. So they are raising taxes on private insurance — up to $400 per premium per year.
The second tax hike affects software purchases, treating them like ordinary sales.
Democrats estimate that the software tax could bring in $2 billion to $3 billion over the next few years.
The California Taxpayers Association says the real cost is much higher, because there are more software transactions than are currently reported.
Once they are taxed, those sales will be more closely watched, and could bring in up to five times the Legislature’s estimate.
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All told, the tax could amount to $14.25 billion, the association says.
That might be good for state spenders, but it’s bad news for California’s economy.
The governor is almost certain to sign these increases. His press office is trying to blame Trump, saying that tax increases passed by California Democrats are somehow “Trump’s tax.”
That is as ridiculous as Joe Biden trying to call inflation “Putin’s price hike.”
The reality is that Newsom and his party are looking for money wherever they can find it. Despite pretending to care about “affordability,” they let the gas tax rise last week, and recently passed a law allowing local governments to increase sales taxes even further.
Until we elect leaders with the guts to cut spending, the tax hikes will continue.
The post Democrats want ‘largest tax increase in state history’ — rather than cutting spending appeared first on New York Post.
