This story is part of California Voices, a commentary forum aimed at deepening understanding of California and shining a spotlight on Californians directly affected by policies, or the lack thereof. Learn more here.
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Californians will be paying billions of dollars this month as they file their federal and state income tax returns and pay a second installment of property taxes.
how much?
Each year, California residents and California-based businesses pay roughly $500 billion in federal taxes, primarily personal income taxes, Social Security taxes, and Medicare payroll taxes, and they also pay at least $500 billion to state and local governments, primarily personal income taxes, sales taxes, and property taxes.
By any standards, California is a high tax state.
The Tax Foundation, a Washington-based organization that tracks tax revenue trends across the U.S., recently reported that California taxes its citizens $7,200 per capita, the highest amount in the U.S., amounting to about $280 billion a year. California's $540 billion in state and local taxes, part of its $4 trillion economy, is the fifth-highest, at 13.5 percent.
Those figures, along with the state's multi-billion dollar budget deficit, set the stage for a major, multi-front battle over taxes this year, including three statewide ballot measures that could dramatically change tax policy.
Progressive Democrats, strongly supported by public employee unions, argue that new taxes are needed to maintain vital welfare, education and health services, but Gov. Gavin Newsom has publicly rejected tax increases and has proposed a budget that would eliminate the deficit, at least on paper, through spending deferrals, accounting tweaks, loans and money from the state's rainy day reserve.
Two years ago, two of California's most respected polling organizations, the Institute of Government at the University of California, Berkeley, and the Public Policy Institute of California, asked residents about their tax burdens and found growing dissatisfaction, in part due to the heavy cost of living.
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The poll highlighted voter rejection of a tax increase measure on the 2020 ballot that would have changed Proposition 13, the iconic property tax limit approved by voters in 1978, and increased taxes on commercial properties.
Business and anti-tax groups, led by the California Business Roundtable, have tried to capitalize on public resistance to higher taxes by endorsing a measure to be placed on the November ballot that would make it much harder to raise state and local taxes.
If passed, the measure would require a two-thirds vote to raise local taxes, effectively overturning a state Supreme Court ruling that required only a simple majority vote for local initiative tax proposals, and would require voter approval in addition to a two-thirds vote by the Legislature to raise state taxes.
The bill's qualification set off a legal and political battle with Governor Newsom, the state legislature, labor unions, and other proponents of tax increases. Governor Newsom and the state legislature filed lawsuits, attempting to convince the state Supreme Court that the bill was a constitutional amendment, not an amendment, and therefore could not be passed by initiative.
Conflicting interests have filed written briefs with the court, but the court has yet to formally decide whether to take up the case and, if so, will likely announce in the coming months whether the bill will be put to a vote.
The state Legislature also voted for its own measure that, if passed, would require business tax limit measures to be approved by two-thirds of voters themselves. It also passed another ballot measure that would lower the voter turnout for local tax and bond measures that increase spending on housing and infrastructure from the current two-thirds to 55%, potentially nullifying the Business Roundtable's measures.
This is a showdown that has been building for nearly 50 years, ever since Proposition 13 was approved. Billions of dollars are at stake, and hundreds of millions of dollars could be spent on supporting and opposing three interrelated bills.
“A free, fair and open press is the cornerstone of democracy.”
Derek, Sacramento
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