A temporary income tax increase in California could become permanent if state unions get their way, but a low-tax advocacy group warned Monday such a move could drive out businesses.
Two separate union-backed proposals would extend the 2012 state income tax hikes which are set to expire in 2018. Jon Coupal, president of Howard Jarvis Taxpayers Association (HJTA), wrote for Union Watch that extending the hike would drive businesses out of the state.
“The damage will be fairly significant,” Coupal told The Daily Caller News Foundation. “California already has the highest marginal income tax rate at 13.3 percent.”
The association advocates for keeping taxes in California low. The proposal by the Service Employees International Union (SEIU) would make the temporary tax increase permanent. The other bill by the California Teachers Association (CTA) would extend the increase to 2030.
“California is quickly becoming uncompetitive,” Coupal continued. “At the corporate level, California has already seen a major outflow.”
The temporary increase allowed the state income tax to jump from 10.9 to 13.3 percent. Both union-backed measures were introduced in September and now wait on whether lawmakers will put them up for a ballot vote.
“Most people realize the state budget is in a surplus,” Coupal added. “Hard to ask for higher taxes with that.”
Extending the temporary income tax would have a huge advantage for public sector unions. Higher revenue into the state allows them to collect more union dues.
The problem is, the high taxes could also drive companies out of the state. Coupal notes some corporations have already moved out. Extending the temporary tax hike could also drive those companies out that tried to stomach the increase knowing it would be temporary.
The SEIU and CTA did not respond to requests for comment from TheDCNF.
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