GOP Tax Plan May Make Business a Target for Tax Raisers in CA

Joel Fox

Editor and Co-Publisher of Fox and Hounds Daily


If the tax plan passes congress, California business better have a shield because they will be the target of tax increase activists.

The House vote on the GOP tax bill was step one. There is a ways to go before the tax cut plan becomes law and on the Republican side there is still last minute jockeying for changes to the final plan that would end up on the president’s desk. Even the state and local tax deductions issue might be altered allowing the deductions to stand if some GOP-oriented economists have their way.

But if a tax cut plan mirrors to some degree what congress passed yesterday, expect a change in strategy on tax issues here in California.

Tax increase advocates have had a run on claiming the rich must pay their “fair share.” The upper-end taxpayers were hit with the highest income tax rate in the country with Proposition 30 in 2012 and four years later the tax was extended with Proposition 55.

Those taxpayers are unlikely to be the target for additional revenues because of the GOP plan.

Without the write off on state and local taxes, the “taxing the rich” theme will become a harder argument to make. Meanwhile, California relies on high-end taxpayers as the foundation for its budget.

Some of those rich folks might just throw up their hands, jump into their Rolls and head across state lines. While the write-offs will be gone in other states as well, if there is no income tax collected on the state level taxpayers abandoning California will avoid state taxes and will not be concerned with the deductions.

More to the point, tax increase activists will look for places to increase government treasuries with the least amount of political strife. Businesses will be a target.

If corporations receive the tax break the administration seeks, you can hear the battle cry now from those who demand government spend more: The Feds cut corporate taxes, let corporations use those tax savings and pay more to fund California…or something like that. I’m sure the consultants for the tax increase groups will be more succinct.

The split roll property tax will certainly become a target even if property tax deductions are eliminated. California’s corporate income tax is relatively high at 8.84% but that may not stop activists who want more or who might suggest new ways to get at corporations.

Business should be aware that whatever benefits business receives from a federal tax cut, they could lose when tax raising advocates set their sights on that new found money.

Share this article: Share on FacebookTweet about this on TwitterShare on LinkedInPin on PinterestEmail this to someone

Comment on this article


Please note, statements and opinions expressed on the Fox&Hounds Blog are solely those of their respective authors and may not represent the views of Fox&Hounds Daily or its employees thereof. Fox&Hounds Daily is not responsible for the accuracy of any of the information supplied by the site's bloggers.