California families and businesses are bracing for what critics are calling the largest tax increase in state history, after Gov. Gavin Newsom and Democratic lawmakers quietly enacted a new budget that hits software downloads and health insurance premiums with steep new charges, the New York Post reports.
One measure extends a tax on health care providers, aiming to raise roughly $2 billion a year to prop up Medi-Cal. The other reclassifies software products as personal property subject to California’s already highest-in-the-nation sales tax, projected to bring in another $900 million annually — meaning residents will pay extra just to use programs like Slack, Adobe or TurboTax. Democrats framed the hikes as necessary to offset federal revenue they claim was lost thanks to “an antagonistic Trump administration.”
Businesses and lawmakers aren’t buying the excuse.
“These tax increases could be the final straw that drives businesses out of California and harms our economy,” said state Sen. Tony Strickland, who accused Newsom of abandoning his own promises. “What happened to addressing the affordability crisis that was supposed to be such a priority?”
The health care tax alone is expected to raise premiums by as much as $400 a month for a family of four, according to the California Association of Health Plans, since insurers will simply pass the new cost on to policyholders.
“At a time when Californians are already stretched thin by the rising costs of housing, groceries, childcare and transportation, adding hundreds of dollars in new health insurance costs is the wrong choice,” the group warned.
State Sen. Suzette Valladares called the timing tone-deaf, pointing to a fresh report ranking California among the worst states in the country to move to this year. “Families aren’t leaving because they don’t love California,” she said. “They’re leaving because they can’t afford it anymore.”
The software tax may prove especially hard to dodge. Tax experts told the Post the charge is “pervasive” — even a Californian who travels to Nevada to download software will still owe the state if the program is primarily used back home, according to David Kline of the California Taxpayers Association.
Congressional Republicans piled on as well, zeroing in on the looming premium spikes. “Californians already pay the highest gas prices in the nation and face one of the highest costs of living anywhere in America,” said Rep. Vince Fong. “The last thing we need is higher health care costs and premiums.”
The tax package lands just as California continues to shed residents and employers to lower-cost states — a trend Sacramento Democrats have shown little appetite to reverse, even as their own constituents sound the alarm.
Newsom has spent much of his term positioning himself as a national voice on affordability, even as his own state routinely ranks among the most expensive places in the country to live, work and run a business. Critics say the new levies only reinforce that contradiction: a governor who talks about cost-of-living relief while signing off on the largest tax package in California history. With both measures already enacted, the only open question left for businesses and families is how quickly the new costs show up on their bills — and how many more of them decide California isn’t worth the price of staying.
Source: nypost.com
