California Moves To Force Businesses To Give Half Of Tax Cut To The State

imagesOne of the elements to the recent tax bill that drew considerable opposition was the move to a neutral tax system that no longer allowed for the writing off of state taxes.  However, there is a valid argument for such an approach since many citizens in low tax states do not benefit to the same degree.  Indeed, those taxpayers have complained that they are effectively subsidizing taxpayers in states like New York and California even though they often make considerably less.  I have come to support the approach for a different reason. It forces local politicians to bear the true costs of tax hikes since they can no longer dismiss objections by saying that their increases will simply be recovered as a deduction on federal taxes.  Now, however, California legislators have pushed legislation to force businesses to give back half of their federal tax savings.

Assemblymen Kevin McCarty (D-Sacramento) and Phil Ting (D-San Francisco) are seeking to create a tax surcharge on California companies making more than $1 million to capture half of the federal tax savings.  They notably are not attempting to do the same for citizens.

 

I am admittedly a critic of high tax approaches in states like New York, Illinois and California, I still view this as better than the older system where politicians could pretend that tax increases were some type of funny money that did not really count.  Now at least California is imposing this tax directly.  If businesses are tired of the hikes, they can move to lower tax states or they can accept the tax increases as part of maintaining a high quality of life in the state.
As a constitutional amendment, the bill would require approval from two-thirds of the Legislature to pass, a difficult hurdle now that Democrats have lost their supermajority. If passed and signed by Gov. Jerry Brown, it would then go to voters for final approval.

Democrats lost their supermajority following resignations of two Assembly Democrats, Matt Dababneh of Encino (Los Angeles County), and Raul Bocanegra of San Fernando Valley (Los Angeles County) amid sexual misconduct allegations. Another Assembly Democrat, Sebastian Ridley-Thomas of Los Angeles, resigned citing health issues. In the Senate, Democrat Tony Mendoza of Artesia (Los Angeles County) is taking a leave of absence pending an investigation into sexual misconduct allegations.

 California Democrats have been exploring ways to help those in the state who could end up paying higher federal taxes next year under the Republican tax overhaul.

The GOP overhaul caps state income taxes and local property tax write-offs on the federal income tax return at $10,000, a move expected to hurt high-local-tax states such as California, where the average state and local tax write-off in 2016 was $22,000.

State Senate President Pro Tem Kevin de León introduced legislation this month that would allow Californians to get around the state and local tax cap with a voluntary donation to a charitable fund created by the state of any amount of owed taxes above $10,000. That donation — in lieu of taxes — would allow donors to write off the gifts on their federal tax returns.

100 thoughts on “California Moves To Force Businesses To Give Half Of Tax Cut To The State

  1. I hate living in California. I really do. Small businesses are the enemy. Gas tax after gas tax. A proposed mileage tax. And now politicians are trying to punish businesses and the state feels entitled to half the savings of a federal tax reduction. How dare a business save a dime! That dime could be spent on the sanctuary state’s efforts to protect violent illegal felons from getting deported again. And they are violently opposed to sealing up the border, the source of their political power.

    They have turned the state into a sewer, and I do mean that literally. Feces, urine, vomit, used condoms, and dirty needles litter wherever politicians encourage homeless camps to proliferate. In their great and tolerant wisdom, they allow encampments in ephemeral dry riverbeds, so the rains wash down human waste and needles all the way to the beach. They protected the homeless camp in the dry hills from getting evicted, which led to the devastating fire they blamed on global warming.

    Actions speak louder than words, and CA has said loud and clear it’s agenda.

    • I really hope CA so thoroughly pisses off voters that we get a Republican governor. Chances are slim, however, as the media is so thoroughly a Democratic mouthpiece.

    • “I hate living in CA.” Then why do you? Living in CA requires strength. We live here because my husband’s daughters and granddaughters are here. Also I was born and raised in CA. If you grew up in CA and your career took you to the East Coast and then back to CA, you don’t leave. WHY? WEATHER! It’s just the best place by far to live. Beautiful almost every day. Rain so rare you actually sit by a window and watch, until the pool gets too full and needs some draining. There are parts that remind me of Detroit, but not near us.

      Currently in Anaheim behind the Angels stadium is a tent city. More a metropolis, with hundreds of a variety of tents, makeshift shelters, stores, and I’m sure drugs everywhere. Children who aren’t in school. A friend drove through it (approx 9 miles) with a window down and practically got high!

      The voters are stupid. They will vote in any tax, any revenue producing program (tax), purchase of school bonds (tax), combined utility taxes higher than sales tax. Why do voters vote for these? Because they don’t pay taxes!

      Now they want to prosecute its citizens if they in any way help ICE arrest an illegal! So don’t watch local news and you are free from the angst!

      • We are self employed. My husband worked years to establish his business and doesn’t want to start over from scratch with a family.

        He spends hours every day in traffic. Homeless keep taking over in front of his business and pooping all over the sidewalk. I’m afraid he’s going to get sick. The taxes are punitive, vehicle registration keeps going up, and now they are going for a mileage tax. That just gets passed on to customers with their grocery bills, shipping bills, and the cost of literally everything else.

        This is why so many have to wait until they retire to get out of this hell.

  2. Individual welfare, in any and all forms, is omitted and, thereby, excluded from and precluded by the Constitution. Congress and state legislatures merely have the power to tax for “general Welfare”, distinctly not individual welfare. Congress has only the power to tax for the benefit of all not one (roads, water, utilities, currency, post office, sewers, etc.). Congress has only the power to tax to facilitate the freedom of all, not impose central planning, redistribution and social engineering for the benefit of favored individuals and special interest groups. Americans in every state benefit from the national, constitutional limitations on taxation.

    California and liberals throughout the country have made a mockery of taxation by weaponizing it; making it punitive, confiscatory and political.

    California and liberals throughout the country are and have been in blatant violation of the constitutional limitations on taxation to “general Welfare”.

    California and liberals throughout the country have usurped the power of the federal government to establish the criteria and parameters of immigration.

    California and liberals throughout the country have violated the Constitution and abrogated the right to private property through so-called affirmative action, fair-housing and non-discrimination laws.

    California and liberals throughout the country have aided and abetted known criminals.
    __________________________________________

    Article 1, Section 8, Clause 1

    “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;…”

  3. If this continues, US businesses are going to have to start structuring their companies to treat California as if it were a foreign country.

    • It isn’t? Well the federal governmen owns outright half the land. The state property is collateral for the state debt and some more for county/city debt. the rest is collateral for personal debt. Mexico refused to take them back because of the water bill. LA, Orange, and Ventura counties use 500 gallons per day per each man, woman and child. 30% of the nations welfare serves California with 12% of he population and half of those on welfare. They have yet to fix the dams and he feds just spent over a billion on forest fires. Most was not federal but private land. then there are the upcomng ICE Raids ordered up by their Governor.and now half the Trump Tax Cut is going to be confiscated by the government.

      Californians could do recall or initiative if they had any …initiative

      Maybe better to sequester those 13 counties and build a wall to protect th eUSA? No. just deport the problems and give the lands to working people imported from Mexico.

      But seriously what do you with a State full of people who hate reality no matter how many versions are on the tooooob?

      Well.

      Be thankful for the Electoral College. Without that all the rest of us would be slave states to Californication …like NY.

      • Leon’s plan assumes that those taxes will be deductible according to the tax reduction bill such is not the case.

        • Corporate state, local, property, etc taxes are fully deductible. It’s interest expense that will be severely limited.

    • Oh, businesses have been leaving for years. Hollywood and the Silicone Valley are probably the State’s largest taxation.

      • Let’s see Apple went off shore and that worked with Irelands very low business tax pass on to the consumers and they grew rich . Then Ireland and others hit them with back taxes Now they want to come home and get an exemption for the money they had to give to Irelland. Where are they going to get money from to bail out Californians from practices that caused them to leave in the first place?

    • What’s the price of a pair of jeans. A loaf of bread. A hamburger. winters worth of heat?

      How much of an employees salary goes for taxes

      About what day on average does medical care shut down due to lack of funding?

  4. HOW LONG DO YOU ALL THINK B4 CALIFORNIA FALLS INTO THE BIG DRINK TO THE WEST???? THESE PEOPLE ARE OUT OF THEIR MINDS. SURPRISED ANYONE CAN STILL LIVE THERE.

    • This is not the story we need to worry about. Read up on how CA is automatically registering illegal aliens to vote when they receive a driver’s license. That has nation-wide impact… because those people can move to another state, surrender their CA license, and receive a new one… then register to vote in their new locale. Maybe your locale.

      • Appropriately, the automatic voter registration with the driver’s license goes into effect on April Fool’s Day.

      • Getting a driver’s license when you are here illegally should not be possible! Just renewed mine and was asked if I wanted to register to vote! They leave nothing to chance. If there had been a recount in CA who knows how many ballots would be tossed, she might have lost!

      • What, do you have a mouse in your pocket? Who is this “we” you purport to represent? I live in the south and I can promise you that your type doesn’t speak for me on any matter whatsoever.

        this is to “ignorant hillbillies are people too” sandi

  5. The Dems are all for a fair tax system as long as it is “more fair” to their constituency. The good professor notes that businesses can simply leave the state if they don’t like the tax. True. Fortunately, we are still in a nation where the free movement of people (and businesses) is possible. But why should they? They are providing jobs in CA and moving may not be an option for small businesses. The idea that hurting a corporation does not hurt the people who work for the corporations is something the Dems have refined.

    • Doesn’t make it true. If hey can’t stay open at the rates California charges is there any choice? And since their customer base is leaving why should they stay? Near where i stay when south of the border is a large maquilladora area. I’ve noticed several as into 4 to 7 new what the US would call small businesses have moved some or all of their production out of the USA and the funny part is all were concerns that supported places like California, Washington, Michigan, Illinois, New York and Massachusetts. Since I know the guards Iasked and received permission to visit each one of them.

  6. I know a guy who had a manufacturing biz in LA for a couple decades that employed ~70 people. He paid a good wage and gave employees good health benefits. Taxes, regulations, work comp drove him to move his biz to Nevada. It was difficult but he is so happy he made the move. He took and assisted any employee who wanted to move. He tells me there has been an exodus underway for several years. California will implode soon.

    “Sooner or later you run out of other peoples money.” Margaret Thatcher on socialism

    • Yep. As is often the case, California officials are happy to conveniently ignore their own userous and unethical behavior, in this case their ludicrously high taxes.

      I find it interesting that this, rather than after the new tax code was announced, comes just days after Apple (who are based in Cupertino) announced that they are repatriating hundreds of billions of dollars.

      Equally interesting: Apple has a second campus outside of the state and is in the planning stages of building another. Perhaps they are considering getting out of dodge as well? Without the bragging rights centered around the tech economy, California is pretty much just an overly-expensive and very broke dump (qualifier: I lived there for several years).

    • Margaret Thatcher’s argument was a flawed one. It only makes sense if you believe that there is just a fixed total amount of money. It does not consider the effects of economic growth. And, more importantly, her comment was made relative to the national UK government and economy. The US on the national level, for example, need never run out of “other people’s money.” The money supply can be set at whatever is needed, and need not result in inflation, if the process is wisely managed.

      Thatcher was trained as a chemist. In her schooling, the flask can only hold 1000 ml of solution, and no more can be created inside.

      • I bet you people really let yer klan swerve out on the Pravda Faux News discussion board; assuming they have one, of course.

        this is to “I never met a racial stereotype that I didn’t like” mikey

  7. All corporate taxes are a sales tax. The tax is passed on to the purchaser of the corporation’s product or services.

    Corporate tax should be zero and replaced by a federal sales tax. All taxes and fees, including federal and sales tax should be included in the price, not added on at checkout, much like gasoline is priced with federal tax and sales tax included in the advertised price.

    Personal income tax is a sales tax as well. The expense of paying employees is passed on to the consumer, too.

    Social programs should be left to individuals and charitable programs.

    According to the OMB the top 20% of earners pay 95% of tax. This makes all social programs from welfare to medicare wealth redistribution from those who earn it to those who did not.

    All that can be ever taxed is GDP. So let’s tax GDP. The federal IRS could be 2000 people who collect a tax on the states based on their state’s GDP. The same rate should be applied to each state. Tax lawyers would be out of business. Billions would be saved now spent in following the arcane rules of the current tax code. The states would be responsible for raising that amount and each state might do it differently.

    Having one tax rate for every state would take away the power of the congress to play favorites with tax breaks.

    Government social programs, if any, should be state by state, not federal.

    Local charity (social programs) work. State and federal programs do not.

    • ghsteele said, “. . . corporate taxes are a sales tax . . . [and] should be . . . replaced by a federal sales tax.”

      ghsteele also said, “Personal income tax is a sales tax as well.”

      ghsteele did not say that personal income taxes should be replaced by a federal sales tax. Instead, ghsteele said that there should be a “state GDP tax.”

      • So who does the spending? What spending? No social programs. Or maybe a few state social programs. Well then, one supposes that eliminating federal spending on all social programs would solve the problem created by a state GDP tax in which the lower-GDP states would otherwise receive more federal spending on social programs than the higher-GDP states.

        But suppose to the contrary that we might actually want to prop up poorer states with greater shares of federal spending on social programs per tax-dollar contributed to federal receipts than shares of federal spending on social programs per tax-dollar received from wealthier states. Why would anyone want to do that? For the sake of having a country in the first place. If we go ghsteele’s way, instead, there would be no reason for any state to remain in The Union. Could that be ghsteele’s secret plan to end The United States of America as we know it?

        • Sounds like liberal gobbledegook based on hothing and ends up with less than nothing and leaves out some important information. It’s not GDP it is NDP or GDP minus expenses. Come back when you can provide that information we’ll think about it.

          • Leaving important information out? Really? Who pays a state GDP tax?

            ghsteele said, “The states would be responsible for raising that amount and each state might do it differently.”

            So who pays a state GDP tax? Isn’t that important information that has been left out? As Uff Da himself said,”Come back when you can provide that information we’ll think about it.”

      • But is should a final end user consumption tax is preferable and should repladce ALL the income taxe and VATs. which are really value subtraced as they add nothing of value.

          • If sales taxes are collected at the point of purchase, then how many other components of GDP would thereby evade the GDP tax?

              • If a citizen of one state or country purchases a product that was manufactured in another state or another country, then aren’t that citizen’s tax dollars subsidizing manufacturing in another state or another country? And you call this a libertarian utopia?

      • Speaking of which how about an initiative in states that have it to van lawyers from public office as having a vested interest that precludes … etc. and makes them inside knowledge traders? .

  8. According to Jon Turley, “tax increases [are] part of maintaining a high quality of life in the state.” That is typical bogus Leftist “thinking.” Taxes and tax increases do NOT go to improving ANYTHING. They go into the POCKETS of corrupt government officials and the companies and shell companies that pay off the corrupt government officials.

    It’s like the money in Hollywood Accounting, in which no matter how big a blockbuster is and how massive the gross is, the bottom line is ALWAYS a net loss when they’re done distributing the money to the insiders.

  9. The windfall – as much as $17 billion a year – would go to low-income workers in the form of an expanded earned income tax credit, tax rebates or other tax relief to be determined, and would be spent on more state-funded child care, early childhood education, affordable health care and college financial aid.

    The state will already have over $13 billion in the reserve (slush) fund and they need more why? There never is a discussion on how to cut spending in other areas to provide additional state-funding for these supposedly important (re: vote essential) programs. These state legislators are absolutely disgusting individuals without a conscience. They have the audacity to declare this a sanctuary state, money flows to benefit those in this country illegally, and they keep wanting to raise taxes to force the citizens to pay for it. Or as JT points out, we could just leave the state.

    • lFor those that disagree i will add in support. like their education reserve that provides $10,000 dinners to the board of directors including Jackboot Janet II Neapolitano ? you expect anyone to beliece that subjective fairy tail?.Ollyis correct they are disgusting.. –

  10. 3 U.S. billionaires have the same wealth as 50% of the U.S. population. Two of them- Gates and Bezos hide out in a state with no income tax, relying on the poor to subsidize the benefits that the rich receive, via regressive taxes. Gates masks his predation with a well-crafted, false, PR image of philanthropy.
    He spends money to destroy democracy. and to privatize America’s most important common good, the one that is most critical to American unity.

    Gates and the Walton’s cost Ohio taxpayers $1 bil. with their promotion of privatized public schools-money wasted on businesses whose owners paid off the state Republican Party

    At one time, the U.S. was the most vibrant, successful democracy in the world. The evidence of what the country has become, is at this blog where the oligarch (Koch) defenders are one and the same with the Russian commenters.

    • The USA has NEVER been a democracy and the so called Democrats are not democratic but socialists. And now you turn on your two biggest supporters. DNC is not pro working class by any definition and the othere two Face Book and Twitter on down to Soros on down to the Clintons keep their money out of the country.

      Sorry you weren’t schooled in civics, history ethics but that’s your problem not ours.

    • Those don’t exist anymore as I recall they were replaced with double personal exemptions. it worked for me and Turbo Tax took it in stride no problem.

      • As I understand the new tax reform law, charitable deductions will still be available in 2018. I don’t think Turbo Tax has done a program for 2018 yet. Turbo Tax must have taken your deductions on your 2017 return. They will do so again in 2018. The issue is whether the IRS will consider the payments to CA as charitable. As sorry of a state as CA is becoming, I doubt that the IRS will consider contributions to the CA budget as charitable. I may be wrong.

  11. If they do not do the same for the citizens, it is unfair. As a business owner, I would sue the state in Fed, Ct,

  12. That’s it you Golden State Democrats, keep removing any doubt about your standing as glory-seeking, money-grabbing spending junkies. This is no different than trying to redefine taxes as charity by inviting donations to the “California Excellence Fund” so it can be redistributed as a form of…what…charity?

    • Why ‘must’ he do that? State your case. Personally I’ld follow the old ‘do you know what to do if you walk by he lake and see the ….. drowning?’ Insert prncipal school board whoever….

      Answer “No

      Followup comment “Good.”

      They have the political will to make change with recall and initiative. Do they have the WILL to do so.? Prop 13 and Three Strikes indicates Yes at least theydid.

      • Law and Order

        Individual welfare, in any and all forms, is omitted and, thereby, excluded from and precluded by the Constitution. Congress and state legislatures merely have the power to tax for “general Welfare”, distinctly not individual welfare. Congress has only the power to tax for the benefit of all not one (roads, water, utilities, currency, post office, sewers, etc.). Congress has only the power to tax to facilitate the freedom of all, not impose central planning, redistribution and social engineering for the benefit of favored individuals and special interest groups. Americans in every state benefit from the national, constitutional limitations on taxation.

        California and liberals throughout the country have made a mockery of taxation by weaponizing it; making it punitive, confiscatory and political.

        California and liberals throughout the country are and have been in blatant violation of the constitutional limitations on taxation to “general Welfare”.

        California and liberals throughout the country have usurped the power of the federal government to establish the criteria and parameters of immigration.

        California and liberals throughout the country have violated the Constitution and abrogated the right to private property through so-called affirmative action, fair-housing and non-discrimination laws.

        California and liberals throughout the country have aided and abetted known criminals.
        __________________________________________

        Article 1, Section 8, Clause 1

        “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;…”

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