Governor Newsom’s revised budget targets a $44.9 billion deficit by implementing indirect corporate tax increases.
Governor Newsom’s Revised Budget
Governor Gavin Newsom recently unveiled a revised 2024-25 state budget addressing a $44.9 billion deficit. When reporters questioned him about raising corporate taxes to avoid cuts in health, welfare, and education, Newsom firmly rejected the idea citing California’s already high tax rates for corporations and high earners, according to the report of CAL Matters.
Despite his stance against direct tax hikes, Newsom’s budget includes indirect tax increases on businesses. The California Taxpayers Association estimates these measures could raise up to $18 billion over the next few years comparable to the $6 billion annually from tax increases approved in 2012.
The biggest proposal would stop corporations with over $1 million in annual revenue from deducting net operating losses and limit business tax credits to $5 million a year. This could increase corporate tax revenue by $15.9 billion over four years. Past suspensions of these deductions have raised concerns about fair taxation across different industries.
(photo: Free Beacon)
Newsom’s Budget Proposals Challenge Tax Ruling, Potentially Costing State $1.3 Billion in Refunds
Another significant proposal seeks to reverse a tax ruling favoring Microsoft, which could cost the state $1.3 billion in refunds. The administration wants to retroactively change the law, ensuring the state doesn’t lose future revenue, but this move could undermine trust in the tax system.
Overall, Newsom’s proposals underscore the political nature of tax decisions highlighting that tax policy can often seem arbitrary rather than based on consistent principles.
