California is truly a national leader in overtaxing its businesses, residents and visitors. Nevertheless, California is looking at a large and growing structural budget deficit for years to come. That is why it is crucial that the next governor of California, whoever it is, have some modicum of understanding of how counterproductive high tax rates are.
A recent survey of the states by the nonpartisan Tax Foundation observed the Golden State “combines high tax rates with an uncompetitive tax structure,” with some of the highest corporate, individual and sales taxes in the country.
“The state has a great deal going for it, with its mild climate, excellent research universities, and the ongoing agglomeration effects of Silicon Valley… but a tax code that is uncompetitive and threatens to get worse is increasingly driving jobs to other states,” the Tax Foundation noted.
This assessment corresponds well to the attitudes of most Californians. In 2023, 70% of Californians told pollsters at the Public Policy Institute of California they feel they pay more in state and local taxes than they should. Earlier this year, a majority (51%) of Californians told PPIC they’d rather pay less in taxes and have fewer government services than pay more in taxes to get more in government services.
Given the confluence of factors, from negative attitudes toward higher taxes to the state’s fiscal imbalance, state government needs leaders who are willing to turn off the spigot of tax revenue and show some fiscal discipline.
Of course, there are gubernatorial candidates with views quite far apart on this. State superintendent Tony Thurmond, for example, is going all-in on a belief that raising taxes and ramping up government spending is the solution.
“My plan will be a tax solely on megamillionaires and billionaires to hire more teachers, healthcare workers, firefighters, construction workers, and social workers,” he recently declared in an ad. “People who will work for the common good. They’ll get paid decent middle class wages, and their jobs will be to help us tackle California’s crises, from housing to crime to public education and more.”
Thurmond also previously backed a split roll property tax system, so his enthusiasm for more taxes and more top-down government solutions is nothing new.
On the other end of the spectrum is Riverside County Sheriff Chad Bianco, who told a podcaster recently that within two terms he would successfully abolish the state income tax. He conceded, “It’s going to be very difficult with a Democrat Legislature who has an unquenchable thirst for your money.”
That’s quite the understatement.
It’s certainly ambitious for Bianco to envision not only winning once as a Republican, but twice, considering the state has voted 60-40 for Democratic candidates for governor since 2014. But not only that, Bianco envisions overcoming ongoing Democratic control of the Legislature to somehow pulling off a seismic overhaul of the state tax code.
That’s something.
One of the few gubernatorial candidates with a more balanced perspective appears to be former Los Angeles Mayor Antonio Villaraigosa.
During a candidate forum in early November, Villaraigosa dismissed talk of higher taxes. “We already have the highest taxes in the United States of America and the highest cost of living in the United States of America,” he said, stressing the focus should be on how to “grow the pie.”
That’s certainly more sensible and realistic. The bottom line, though, is that candidates need to ground their visions in reality. The reality is that Californians are overtaxed.