California Plan Imposes 10 Percent Surtax on Trump Tax Cut Beneficiaries

Golden State lawmakers introduced legislation to force some companies to fork over half their tax savings to fund state projects

Two California lawmakers retaliated against the passage of President Donald Trump’s historic tax cuts in December by introducing legislation last week that would force large companies to relinquish half their tax savings to the state.

Democratic Assemblymen Kevin McCarty and Phil Ting decried the Trump administration’s “middle-class tax increase” when they introduced Assembly Constitutional Amendment 22 (ACA 22). If passed, the amendment would force companies making more than $1 million in net earnings to fork over a 10 percent surcharge to the state.

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“I’ve seen enough billionaire justice in the first eleven months of this presidency to last my lifetime,” McCarty said in a statement. “At a time when reckless federal tax policy favors billionaires over middle-class workers, ACA 22 will help ensure that California can continue to grow and support middle-class families throughout the state.”

Ting also blasted the administration’s tax reform plan in a statement, saying, “It is unconscionable to force working families to pay the price for tax breaks and loopholes benefiting corporations and wealthy individuals.”

“Trump’s tax reform plan was nothing more than a middle-class tax increase,” Ting said. “This bill will help blunt the impact of the federal tax plan on everyday Californians by protecting funding for education, affordable health care, and other core priorities.”

The Trump administration contends that slashing the corporate tax rate from 35 percent to 21 percent will boost the economy, encourage businesses to stay in the U.S., and put more money into American workers’ pockets. After the tax bill passed, many companies across the nation announced pay raises and bonuses for their employees, along with new investments.

Business leaders warned that the passage of ACA 22 would negate many of these economic benefits and curb optimism.

“Many large employers, including California-based companies, have announced bonuses or pay increases as a result of the recently enacted tax reform, putting more money in the pockets of hardworking Californians,” Rob Lapsley, president of the California Business Roundtable, said in a statement, The Sacramento Bee reported.

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“Imposing tens of billions of dollars in new taxes on employers will be a major step backwards that will only hurt middle-class Californians struggling to make ends meet,” Lapsley continued.

Although California is a liberal state, ACA 22 still faces an uphill battle because it must be approved by two-thirds of the Senate. Democrats lost their supermajority after two members resigned as a result of sexual misconduct allegations, another took a leave of absence because of sexual misconduct allegations, and another member resigned due to health concerns.

But balking against tax reform isn’t the first time this year that California has flagrantly defied the Trump administration. After becoming a “sanctuary state” in 2018, California officials have largely refused to comply with federal immigration enforcement officials.

PoliZette writer Kathryn Blackhurst can be reached at [email protected]. Follow her on Twitter.

(photo credit, article image: Flag-of-California, CC 0, by Makaristos / Donald J. Trump…, cut out, CC BY 2.0, by Michael Vadon)

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