In November 2020, California voters rejected a $10 billion business-tax hike, showing understandable concern about tax increases during an economic downturn. Since then, tax revenues have surged at the fastest rate in four decades, giving the state a $31 billion budget surplus.
One might think that this good fortune would negate the need to raise taxes, but some California lawmakers see things differently. Apparently believing that the 2020 tax referendum failed for a lack of boldness, assembly members Ash Kalra and Alex Lee have proposed Assembly Constitutional Amendment No. 11 to raise annual taxes by $163 billion per year. The package would nearly double California’s tax burden to fund CalCare, a universal health-care program. Setting aside California’s governance weaknesses, the proposal is a poor fit for the new era of interstate tax competition.
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