SACRAMENTO — One potential consequence of California’s ballooning budget deficit: Higher taxes for businesses, with increases possible every year for the next decade.
Business owners pay a tax on each of their workers. The money goes into a fund that states use to pay unemployment benefits when people lose their jobs. During the Coronavirus pandemic, so many people lost jobs that many of these funds ran out of money.
Twenty-two states borrowed from the federal government so they could keep paying unemployment benefits. Those states must pay that money back, plus interest. Most states have already done this. But California is one of five states that hasn’t. The state owes $18.9 billion.
If California doesn’t pay the money back, businesses have to do it through higher taxes. California was supposed to start paying off the debt this year with $1.5 billion — $1 billion toward the debt, plus another $500 million to help small businesses pay their increased taxes.
But that was before California had a $22.5 billion budget deficit. Now, Democratic Gov. Gavin Newsom wants to cancel $1.25 billion of that spending to help cover the state’s budget shortfall. That means businesses will have to pay an additional $21 per employee in federal unemployment insurance taxes this year. That tax will keep increasing by $21 every year over the next decade that the debt is not paid off.
It could take at least 10 years for businesses to pay off the debt, according to the nonpartisan Legislative Analyst’s Office. Meanwhile, the Newsom administration expects California will have a multibillion dollar budget deficit not just this year, but also in each of the next three years — meaning it’s not likely the state will start paying off the debt anytime soon.
California could have paid off the debt, or at least a sizable portion of it, in the past two years when it had a combined general fund budget surplus of $119.4 billion. But state officials didn’t do that, to the frustration of business owners like Denise Duncan who are now stuck paying the higher tax.
The tax increase won’t be a significant burden for Duncan this year because she has only two employees. But she said it angers her she’s stuck paying for something that wasn’t her fault after the government ordered many businesses to shut down during the pandemic.
“We’re getting hit over the head with hammers every time we turn around with increased costs, whether it’s gas doubling, whether it’s insurance and utilities,” said Duncan, owner of AT Industrial Products in Pomona. “They had a surplus. So why didn’t they use it?”
One reason is simply the massive size of California’s debt. As the nation’s most populous state, California also has the largest economy and the most workers. It’s $18.9 billion debt is more than twice as large as every other state.
Instead of paying off its unemployment debt, the Democrats in charge spent the money on other things. They gave $21.4 billion of it back to taxpayers, sending three rounds of stimulus checks to help people weather the pandemic and offset rising gas prices. The rest of it went to things like public schools, roads and bridges, health care and homelessness programs.
Higher taxes for businesses....who in return leave California...like Elon Musk did...He opened a Tesla GigaFactory in Texas because of California's parasites taxes. $19 billion dollar deficit...Yet Newsom the Idiot wants to buy votes by giving people reparations...in a state that never had slaves. That's how Democrats roll...They create a problem..then want praise for trying to clean up the mess "that they made". Which means you lose a Congressman...New York (parasite central) also lost a Congressman...now the Parasites (N.Y.s politicians) will have to increase taxes on those that cannot afford to move....which will drive even more people out of the state....See how that works...? Today's younger generation will be shocked when they realize how much debt "they" owe. So it is "poetic justice" that the toddlers support the politicians.... that are ruining their futures....Enjoy Toddlers....Enjoy.
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