Delusional California lawmakers plan to hike state corporate taxes to claw back the money left over by federal corporate tax cut
The perfect plan to drive the remaining businesses out of California has been hatched by a couple of genius members of the California Legislature.
Alexei Koseff reports for the Sacramento Bee:
A pair of California lawmakers want to claw back some of steep tax cuts that corporations will receive under the federal tax overhaul signed last month by President Donald Trump.
Democratic [a]ssemblymen Kevin McCarty of Sacramento and Phil Ting of San Francisco announced Thursday that they will pursue a constitutional amendment to add a surcharge on large companies that do business in California, potentially raising billions of dollars to expand social services for Californians.
"We've seen enough billionaire justice from the presidency," McCarty said in an interview. "It's time for middle[-]class tax justice."
Trump's plan reduced the federal corporate tax rate from 35 percent to 21 percent, which Republican and business leaders hailed as an incentive for a surge of capital investment and job growth. But Democrats denounced the change as a giveaway to the wealthy that would grow the national debt and require future cuts to welfare programs such as Medicaid.
The most charitable explanation is that this is nothing more than a P.R. ploy, because the overwhelming stupidity of such a move is so obvious. Bye-bye, Apple, Facebook, Google, and on down to every corporation that is not anchored in the state (think Joe's Auto Repair).
Meanwhile, slightly smarter Democrats are starting to realize the mortal threat posed by the state's confiscatory income tax rates now that state income taxes above $10,000 a year are not deductible. Adam Ashton of the Bee:
[W]ith the federal tax bill cutting off deductions that benefited well off Californians, the state's Democrats suddenly are singing the GOP song about a potential millionaire exodus.
"People with higher incomes pay a lot more money, and some of them may be tempted to leave," Gov. Jerry Brown said when he unveiled his 2018-19 budget proposal last week.
Bingo! Of course, Brown blames Republicans, not his state's heavy taxation of upper-middle-class and wealthy taxpayers.
The state's wealthiest 1 percent, for instance, pay 48 percent of its income tax, and the departure of just a few families could lead to a noticeable hit to state general fund revenue. ...
Because real estate in coastal counties is so expensive with median home prices in the nine-county Bay Area topping $768,000, the cap on mortgage interest deductions probably will bite some middle[-]class Californians, too.
In two reports last month, the Institute for Taxation and Economic Policy found that 11 percent of Californians would wind up with a tax increase because of the federal changes. ...
About 25 percent of Californians earning between $130,820 and $304,630 also would see a tax increase, according to the tax policy institute.
Will the numbers add up to encourage a high-earning family to leave California?
"The new tax law is kind of like icing on the cake for some who were thinking about moving out of the state," said Fiona Ma, a Democrat on the tax-collecting Board of Equalization who is running for state treasurer. "If they don't have to stay here because of work or family, it doesn't give them a lot of incentive."
I am watching friends already buying homes elsewhere. I don't think the Dems have a clue about the devastation ahead.