California May Soon Double Its Taxes To Pay For Influx Of Illegals

OPINION:  This article contains commentary which may reflect the author’s opinion

A new bill unveiled by California lawmakers at the beginning of the year proposes to establish a single-payer health care system. The plan would be funded by nearly doubling the state’s already-high taxes.

It has been determined that the proposed constitutional amendment would increase taxes by roughly $12,250 per household to fund this first-of-its-kind health care system, according to a recent analysis by the Tax Foundation, an independent nonpartisan group that supports lower taxes. As a result of the tax increases, California will collect more in tax revenue than it ever did before the pandemic, $163 billion more per year.

Jared Walczak, a fellow at the Tax Foundation, says the proposal has three main revenue-raising features: higher income taxes on the wealthy, a payroll tax on large companies’ employees, and a new gross receipts tax.

It is estimated that the top marginal rate on wages will rise to 18.05% under the proposed legislation, which is much higher than the state’s 12.3% rate and the median top marginal rate of 5.3%. Under the 18-bracket plan, higher taxes kick in for people earning over $149,509. The highest rate would apply to people earning over $2,484,121.

If a company employs more than 50 employees, the payroll tax for employees earning more than $49,990 would also be expanded in California. According to Walczak, the plan could act as a deterrent for small businesses to expand because it would inadvertently create a tax cliff.

For example, if a company that already has 49 employees earning $80,000 each hired one more, it would suddenly need to pay more than $90,000.

Moreover, the state would also impose a new gross receipts tax (GRT) of 2.3% on qualified businesses minus their first $2 million in gross receipts, which is three times higher than the current highest GRT in the country.

In his remarks, Walczak noted that the proposed tax increases come as California struggles to retain residents as more move to red states with lower taxes. Using Census Bureau data, a separate Tax Foundation analysis shows that California’s population declined 0.8% by 2021 while lower-taxed states saw their populations rise.

“Practically doubling state taxes—even if the burden is partially offset through state-provided health coverage—could send taxpayers racing for the exits,” Walczak noted.

Health care would be provided at government expense for all Californians, which supporters say will offset higher taxes and save money over time.

In the past, Democratic Governor Gavin Newsom has spoken in favor of single-payer health care, although he has not commented specifically on this proposal. This bill was sponsored by Assemblymember Ash Kalra.

Aside from the tax increases in that bill, Governor Newsome introduced a budget this month that would allow illegal aliens to sign up for Medi-Cal. The system would cover illegal immigrants who are pouring in at an unprecedented rate as the Biden administration allows the crisis on the border to continue.

Despite one major exception, the number of Californians without health insurance has been dropping steadily over the past decade.

However, the federal Affordable Care Act excludes undocumented immigrants, which now represent the majority of uninsured people in the state.

A recent analysis from the Center for Labor Research and Education at the University of California, Berkeley shows that almost two-thirds of undocumented immigrants under age 65 lack health insurance, compared with less than 10 percent of all Californians.

In the new year, Gov. Gavin Newsom has focused on having illegal aliens covered.

Undocumented immigrants would be allowed to enroll in Medi-Cal, California’s health program for the poor, according to a budget plan Newsom unveiled this month. A state-wide single-payer health care system is not part of this effort.

Undocumented Californians under 26 already have access to Medi-Cal, and those over 50 will be able to in the spring. Adding 700,000 more undocumented people to Medi-Cal would cost $2.2 billion annually, according to Newsom.

“We are positioned with this budget to be able to deliver on what we’ve been promoting: universal health care for all,” Newsom said at a news conference. “I’m proud to be here — I hope we see this replicated across the country.”

Health advocates have long advocated applying Medi-Cal to illegal aliens. The execution of that vision seemed to be difficult, however, until the Coronavirus outbreak.

With the implementation of the Affordable Care Act in 2014, the uninsured rate in California fell from 17 percent to 7 percent.

Undocumented immigrants could not sign up for Medi-Cal or Covered California through federal rules. A fifth of illegal aliens living in the United States reside in California.

“It was always a sort of clear and troublesome exclusion — that we are expanding coverage to everyone, but with one glaring exception,” Anthony Wright, executive director of the health advocacy group Health Access California, says.

Activists like Wright and others began pushing for the state to use its own funds to provide insurance coverage to illegal aliens.

The California legislature allowed illegal alien children to receive Medi-Cal coverage in 2015. Four years later, the law was amended to include illegals under 26.


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