California Could Adopt a 2.3 Percent Gross Receipts Tax to Help Fund CalCare
Posted on 01/11/2022
In January 2022, California legislators from the Democrat party introduced a constitutional amendment (ACA 11) that would increase taxes by US$ 12,250 per household. The money would be used to fund a state-managed healthcare system. This measure would impose an excise tax, payroll taxes, and a State Personal Income CalCare Tax at specified rates to fund comprehensive universal single-payer health care coverage and a health care cost control system for the benefit of every resident of the state.
The new taxes would take effect in three ways:
1. A gross receipts tax of 2.3%, excluding the first US$ 2 million of business income.
2. A graduated-rate payroll tax system.
3. Surtaxes at the top of the current individual income tax structure beginning at US$ 149,509 per year in income.
The top marginal rate on wage income would increase to 18.05%. The state would adopt a new 2.3% gross receipts tax (GRT). An annual excise tax is hereby imposed upon a qualified business, as defined by the Legislature, for the privilege of doing business in this state at a rate of 2.3%of the gross receipts of that qualified business minus the first two million dollars ($2,000,000) in annual gross receipts of that business. In addition, a payroll tax would be imposed on every employer who pays wages or other compensation to 50 or more resident employees for services performed either within or without this state at a rate of 1.25% of the aggregate amount of wages or other compensation paid by the employer to the resident employees. The top marginal federal income tax rate is 37%. By combining the state-federal top marginal income-tax rate in California under this proposal it would be 55.05%.
The CalCare Trust Fund would be managed by the California State Treasurer and be held in trust for the sole purpose of funding comprehensive universal single-payer health care coverage and a health care cost control system for the benefit of every resident of the state, and reserves deemed necessary to ensure payment.
Politically-speaking, Democrats have a majority in both State chambers, as well as having a Democrat governor of the state.
Here is the bill: https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202120220ACA11