With the revelation that the cost of a single payer health care system in California at $400 billion would dwarf the state budget, an analysis of the bill suggested some of the money could be captured with a 15% payroll tax. All of a sudden the Fight for 15 has a new meaning. Those minimum wage workers who do eventually earn $15 an hour after the successful Fight for 15 campaign in California will yield a lot of that new income if they have to pay the payroll tax.
Lawmakers speak passionately about supporting workers. It’s business they expect to carry the load for much of the progressive agenda pushed in Sacramento. Yet, workers often suffer under programs that are designed to affect business.
Payroll taxes are taxes paid on the wages and salaries of employees. Payroll taxes are usually split between the employer and the employee but as the Tax Foundation explains, “Perhaps one of the best-kept secrets of payroll taxes is that employees effectively pay almost the entire payroll tax, instead of splitting the burden with their employers. This is because tax incidence is not determined by law, but by markets.”
Of course, business also takes a hit with additional bookkeeping, labor costs and more expensive goods and services that restrict sales. A payroll tax would not be good for either the employer or the employee.
Analysts examining the single payer bill, SB 562, floated the 15% payroll tax idea. The bill’s authors, Senators Ricardo Lara and Toni Atkins, haven’t formally introduced a funding proposal but large tax increases will be involved and business is likely to be a target.
Pushing a progressive agenda in California often means obligating, taxing and regulating business.
Consider:
The onus to fund greenhouse gas programs falls to business under the cap-and-trade law.
Last year the state passed a new minimum wage law, which like the payroll tax, would hurt a number of workers, especially those trying to break into the labor market.
The legislature doesn’t want to stop there. Bills in the legislature propose to dictate to business worker scheduling mandates (AB 5), paternity and maternity time off mandates, (SB 63), and directives for more data collection on compensation (AB 1209). These added demands would be on top of the myriad of labor laws that often get business owners in trouble when they innocently forget to dot an i or cross a t.
Then there are the taxes aimed at business such as requiring payment of capital gains on the inheritance of a family business as well as eliminating a deduction for corporations with regard to CEO compensation (SB 567); or the measure to raise the top income tax rate another percentage point to fund free college education (AB 1356) in a state where many small business owners run their taxes through personal income taxes.
The push for progressive solutions focus too often on demanding more from business despite the fact that California continues to be rated as a difficult place to do business. The most recent Tax Foundation Business Climate ratings has California down near the bottom of all states in 48th place.