Please ensure Javascript is enabled for purposes of website accessibility
California Dems Propose Tax Hike for Big Businesses, Cuts for Smaller Ones
gvw_ap_news
By Associated Press
Published 2 years ago on
April 27, 2023

Share

Getting your Trinity Audio player ready...

Democrats in the California Senate on Wednesday said they want to raise taxes on some of the largest corporations so they can cut taxes for nearly every other business.

But the proposal was met with swift opposition from the business community and Democratic Gov. Gavin Newsom — highlighting the likely rocky budget negotiations ahead for a state facing an estimated $22.5 billion budget deficit.

All California businesses pay a state tax rate of 8.84% on income, a figure that has not changed since 1997. This new proposal would create two tax rates for businesses in California. Companies would pay 6.63% on the first $1.5 million they make. Any money made above that would be taxed at 10.99%.

The higher tax rate would only apply to about 2,500 companies and would bring in an extra $7.2 billion in revenue for the state. Meanwhile, about 1.6 million businesses would benefit from the smaller tax rate, reducing state revenue by about $2.2 billion.

The money that is left over — about $5 billion — would go to poor people who claim tax credits and would boost state programs for public education, child care and combatting homelessness.

The proposal is still a long way from becoming law. Tax increases require a two-thirds vote of both houses of the Legislature. Democrats control a majority of seats in both chambers, but leaders in the state Assembly have not yet agreed to the plan.

Then there’s Democratic Gov. Gavin Newsom, who would have to sign off on the proposal. Newsom has resisted raising taxes in the past as he has been building his national profile in recent years in advance of a possible run for president beyond 2024. Last year, Newsom campaigned against a ballot initiative that would have raised taxes on the rich to pay for environmental programs.

Wednesday, Newsom spokesman Anthony York said the governor could not support the proposal..

“It would be irresponsible to jeopardize the progress we’ve all made together over the last decade to protect the most vulnerable while putting our state on sound fiscal footing.” York said.

Still, Democrats in the Senate will try to sell the idea by framing it as a partial reversal of the federal tax cuts signed into law by former Republican President Donald Trump. Nearly every Democrat in California, including Newsom, opposed those cuts, which Trump signed into law in 2017.

“The Senate’s 2023 plan will provide much needed tax relief to those small businesses which are the backbone of our economy and that have been really whacked by inflation,” said state Sen. Nancy Skinner, a Democrat from Berkeley and chair of the Senate Budget Committee. “But it also ensures that the biggest corporations that pocketed massive tax cuts under Trump will start to pay their fair share.”

Chamber of Commerce Opposes Plan

The California Chamber of Commerce opposed the plan on Wednesday, saying a tax increase would “send the wrong signals to job creators and investors in the state’s economy.”

“Now is not the time to test California’s ability to withstand the impact of an economic downturn or a recession by placing our economic success at risk,” said Jennifer Barrera, the chamber’s president and CEO.

John Kabateck, California state director for the National Federation of Independent Business, which represents small businesses, said the proposal “looks appealing at first glance.” But he said his years of experience in dealing with leaders in the state Legislature has taught him not to endorse proposals too quickly.

“We’re not very keen on getting a tax break for Main Street at the expense of other businesses,” Kabateck said.

Democrats in the state Senate based their proposal on budget numbers the Newsom administration released in January. Back then, Newsom said the state was facing an estimated $22.5 billion deficit.

Those numbers will change next month when Newsom updates his budget proposal based on new tax revenue received since January. It’s likely the budget deficit will have grown, as tax revenues have continued to fall below projections. A larger budget deficit could make the Democrats’ tax cut proposal infeasible.

Adding to the difficulty is that Newsom and lawmakers will have to pass a new spending plan before July 1 without knowing how much money the state has. That’s because many Californians won’t pay their taxes until mid-October, taking advantage of an extension offered after a series of strong winter storms caused widespread damage throughout the state.

Republican state Senate leader Brian Jones said he liked that Democrats were “finally proposing to give a little back to small business.”

“Where have they been all these years when Senate Republicans have been putting forth real proposals to get this done?” he said.

RELATED TOPICS:

DON'T MISS

Fashion Fair’s Forever 21 to Close. ‘Still a Ways to Go,’ Says Employee

DON'T MISS

Who Runs Elon Musk’s DOGE? Not Musk, the White House Says.

DON'T MISS

New Self-Pollinating Almond Tree Could Be Huge for a Big Fresno Cash Crop

DON'T MISS

Madera County Secures First Fentanyl-Related Homicide Conviction

DON'T MISS

Musk Team Seeks Access to IRS System With Taxpayers’ Records

DON'T MISS

Bannon Calls Musk a ‘Parasitic Illegal Immigrant’

DON'T MISS

Fresno Weather Forecast: Pretty as a Postcard

DON'T MISS

Kennedy Says ‘Nothing’ Off-Limits in Scrutinizing Chronic Disease

DON'T MISS

Judge Declines to Immediately Block Elon Musk or DOGE From Federal Data or Layoffs

DON'T MISS

NBA Playoff Race Heats Up as All-Star Break Ends

UP NEXT

Musk Team Seeks Access to IRS System With Taxpayers’ Records

UP NEXT

Bannon Calls Musk a ‘Parasitic Illegal Immigrant’

UP NEXT

Judge Declines to Immediately Block Elon Musk or DOGE From Federal Data or Layoffs

UP NEXT

CA Electricity Bills Could Soar Even Higher as Big Tech Builds More Data Centers

UP NEXT

Small Businesses Drive the Economy. Yet Their Funding Is at Risk Under Trump.

UP NEXT

Trump to Sign Executive Orders as Joint Interview with Musk Airs

UP NEXT

Trump Admin Gives Schools Deadline to End DEI Programs or Lose Federal Funding

UP NEXT

Stock Market Today: Wall Street Nears Record as Stocks Drift Amid Inflation Concerns

UP NEXT

Should Builders Permit Their Own Projects? Post-fire LA Considers a Radical Idea

UP NEXT

Royal Caribbean to Launch First-Ever San Diego Cruises in 2026

Madera County Secures First Fentanyl-Related Homicide Conviction

3 hours ago

Musk Team Seeks Access to IRS System With Taxpayers’ Records

3 hours ago

Bannon Calls Musk a ‘Parasitic Illegal Immigrant’

4 hours ago

Fresno Weather Forecast: Pretty as a Postcard

4 hours ago

Kennedy Says ‘Nothing’ Off-Limits in Scrutinizing Chronic Disease

4 hours ago

Judge Declines to Immediately Block Elon Musk or DOGE From Federal Data or Layoffs

4 hours ago

NBA Playoff Race Heats Up as All-Star Break Ends

4 hours ago

NASCAR’s Jeff Gordon Talks ‘Days of Thunder’ Sequel With Tom Cruise

4 hours ago

Adames Joins Giants, Excited to Team Up With Gold Glover Chapman

4 hours ago

Leonard Peltier Released After Biden Commuted Sentence in FBI Agents’ Killings

5 hours ago

Fashion Fair’s Forever 21 to Close. ‘Still a Ways to Go,’ Says Employee

Signs hung throughout fast-fashion clothing store Forever 21 show discounts ranging from 10% to 40% off the “entire store.” And,...

17 minutes ago

17 minutes ago

Fashion Fair’s Forever 21 to Close. ‘Still a Ways to Go,’ Says Employee

2 hours ago

Who Runs Elon Musk’s DOGE? Not Musk, the White House Says.

2 hours ago

New Self-Pollinating Almond Tree Could Be Huge for a Big Fresno Cash Crop

Fentanyl M30 Pills
3 hours ago

Madera County Secures First Fentanyl-Related Homicide Conviction

3 hours ago

Musk Team Seeks Access to IRS System With Taxpayers’ Records

FILE — Steve Bannon speaks to reporters outside State Supreme Court in Manhattan, Feb. 11, 2025. Stephen Bannon, a top adviser during President Trump’s first term and a key figure among his supporters, said Elon Musk wants to “play-act as God” as part of his push to overhaul the federal government. (Jefferson Siegel/The New York Times)
4 hours ago

Bannon Calls Musk a ‘Parasitic Illegal Immigrant’

4 hours ago

Fresno Weather Forecast: Pretty as a Postcard

4 hours ago

Kennedy Says ‘Nothing’ Off-Limits in Scrutinizing Chronic Disease

Help continue the work that gets you the news that matters most.

Search

Send this to a friend