A pair of California lawmakers want to claw back some of steep tax cuts that corporations will receive under the federal tax overhaul signed last month by President Donald Trump.
Democratic Assemblymen Kevin McCarty of Sacramento and Phil Ting of San Francisco announced Thursday that they will pursue a constitutional amendment to add a surcharge on large companies that do business in California, potentially raising billions of dollars to expand social services for Californians.
The proposal from McCarty and Ting creates a new tax for businesses in California, which already has a state corporate tax rate of 8.84 percent. Companies with annual net income of more than $1 million in California would pay an additional surcharge of 7 percent, or half their savings from the recent federal tax cut.
If approved by two-thirds of the Legislature, Assembly Constitutional Amendment 22 would go before the voters for final consideration. Proponents estimate it would raise between $15 billion and $17 billion a year, which would be directed toward funding for education, college affordability initiatives, child care and preschool slots, taxpayer rebates and an expansion of California’s Earned Income Tax Credit.
Business groups have long complained that California is among the worst states in the country for companies because of its high taxes and extensive regulations. But with the “Trump tax giveaway,” McCarty said, corporations can now afford to give some of the money back to Californians who need the help.
The outflow of businesses from California has been happening for quite a while. This will help push some of those businesses out to other states. Wisconsin is open for business!