California proposes double tax rates

ACA 11 is a proposed amendment to the California State Constitution that focuses on raising money to fund a single-payer healthcare system, CalCare. If passed, the bill would roughly double California’s tax rates in order to raise an additional 163 billion dollars per year, more money than California has ever raised, even before the pandemic.

As reported by the Tax Foundation and the Washington Examiner, the raise in taxes would come in three ways, the first of which being an income surcharge for anyone who makes more than $149,509. The bill would also create a payroll tax add-on that applies to anyone who makes more than $49,990, including employees who work at a company with more than 50 employees. Lastly, a 2.3 percent gross-receipt tax (GRT), a tax that is based on business revenue, not profit, will be placed on the money made by companies with the exception of a company’s first two billion dollars. 

The resulting 18 tax bracket system would increase the top marginal income tax rate to 18.05 percent. That is 12.75 percent points higher than the national median and would mean that taxes for an average household would increase by about $12,250. According to the National Review, the increase in taxes would raise the combined state-federal top marginal income tax rate to 55.05 percent. That rate is higher than European nations, with the exception of Denmark and Finland, that already have a single-payer healthcare system in place.

People against the bill argue that California already has one of the highest tax rates in the nation and that it will be harmful to the economy to increase taxes. The new GRT is particularly controversial as it is three times more than the current highest GRT in the nation and will be in addition to property taxes and an 8.84 percent corporate income tax. Many people have expressed concern that the new GRT would discourage businesses from opening in California.

Those in favor of the bill, including the California Nurses Association, argue that the benefits of the single-payer healthcare system would benefit Americans across the state, making it worth the tax increase.

January 31, 2022 marked an important deadline for the bill as it was the date by which the bill must receive a majority vote in Congress or be considered “dead.” As reported by the Los Angeles Times and Politico, Assemblyman Ash Kalra decided not to put the bill up for a vote due to a lack of support for the bill, allowing the bill to officially “die,” much to the anger of some of his fellow supporters of the bill.

“I’m deeply disappointed that the author did not bring this bill up for a vote today. I support single-payer and fully intended to vote yes on this bill,” said Assemblyman Anthony Rendon in the statement he released January 31 on Twitter.