California Legislature Moving to Double Corporate Tax Rate

California’s Democrat-controlled Legislature is moving forward with putting a constitutional amendment on the June ballot to double the corporate tax rate.

Assemblymen Kevin McCarty [D-Sacramento] and Phil Ting [D-San Francisco] announced on Jan. 18 that they will sponsor a constitutional amendment to add a 7 percent corporate tax surcharge for any profit over $1 million.

Although the Tax Foundation listed Iowa with the highest corporate tax rate at 12 percent and California only the 7th ranked at 8.84 percent, many companies use deductions to cut California’s effective tax rate to the alternative tax minimum of 6.65 percent.

But California has also won Chief Executive’s booby-prize for the Worst State for Business each of the last 6 years. The 500-top CEO survey found a “variety of measures of tax and regulatory regime” make California the most expensive state to do business.

Despite this already deeply negative environment for business, Democrats Ting and McCarty want California to charge an extra 7 percent corporate surtax that would not be subject to business deductions. Their goal is to grab the cash California corporations are saving from President Trump’s Tax Cuts and Jobs Act and spend it on social services.

The White House has been trumpeting that the corporate tax cut from 35 percent to 21 percent, has already resulted in 2 million workers getting “Trump Bonus” or “Trump Pay Raise;” the National Association of Manufacturers found their member’s optimism levels at “the highest [point] in the survey’s 20-year history;” and the Council of Economic Advisers estimates the economy will grow by “an additional 3 percent.”

But Assemblymen McCarty spoke for all of California Democrat social justice warriors when he told the Sacramento Bee, “We’ve seen enough billionaire justice from the presidency.” He added, “It’s time for middle-class tax justice.”

As a recent Vanity Fair article proclaimed, “Republican Tax Plan Is An Elaborate Middle Finger To Liberals.” According to comments by Heritage Foundation economist Stephen Moore, the tax reform limitation on state and local tax deductions (SALT) will result in a direct negative economic hit to liberal blue states, especially California.

Golden State’s taxpayers claim SALT at the highest deduction per claimant of any state at $36,802. For many Democrats, Trump’s tax cut will create a $12,000 state tax increase.

Ting and McCarty are also furious that a tax reform measure is meant to stop illegal aliens by now requiring parents who claim the child tax credits to produce valid Social Security numbers. Eliminating the widespread use of bogus Individual Taxpayer Identification numbers will eliminate hundreds of billions of California’s rampant welfare and Medicaid entitlement fraud.

If Assembly Constitutional Amendment 22 is approved by two-thirds of both the California Assembly and Senate, it could be placed on the June ballot. Ting and McCarty predict that it may increase corporate taxes by up to $17 billion and the money could be spent on expanding the earned income tax credit, college affordability, child care, and education.


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