California Democrats agreed this week to tax-related proposals that could raise health insurance premiums and slap a new tax on software downloads — as critics blast the deal for piling on costs at the worst possible time.
California lawmakers inked a $356 billion state budget late Monday that will be negotiated and finalized with Gov. Gavin Newsom within the next two weeks.
So far, legislators have come to an agreement with Newsom on three tax measures to raise more revenue, as fiscal watchdogs have warned that California is still “ill prepared”for even a slight hiccup in revenues in the future.
One measure would extend a tax on health care providers to potentially generate roughly $2 billion a year starting next year. While the state had taxed Medi-Cal providers at a higher rate to get federal funding, that revenue will be gone — so policymakers are eyeing a tax on private plans.
But some experts said that could drive up health plan costs and hike monthly insurance premiums.
“This budget is a reflection of the majority’s values,” said Assemblymember David Tangipa (R-Fresno), in a statement. “If you’re a hard-working Californian or a business owner, your taxes are going up. If you pay for private insurance, your bill is going up.”
Lawmakers also seem to agree on a sales tax imposed on software like Slack and Microsoft Suites starting next year. Lawmakers also want to cap a tax credit that big businesses could claim.
Business groups opposed that measure, saying it could stifle innovation.
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