TRICK or TREAT: California Ranks Among 10 Worst in U.S. for High Taxes

The Tax Foundation’s State Business Tax Climate Index 2023 finds California has maintained its position as number #48 for the worst taxes in the country, in a near three-way tie with New York and New Jersey.

California still ranks in the bottom three for worst for individual taxes.

The Tax Foundation has released its annual State Business Tax Climate Index enables business leaders, government policymakers, and taxpayers to gauge how their states’ tax systems compare. While there are many ways to show how much is collected in taxes by state governments, the Index is designed to show how well states structure their tax systems and provides a road map for improvement.

What do high tax states have in common? “Complex, nonneutral taxes with comparatively high rates.”

What do low-tax states have in common? “The absence of a major tax is a common factor among many of the top 10 states,” the tax Foundation reported. “Property taxes and unemployment insurance taxes are levied in every state, but there are several states that do without one or more of the major taxes: the corporate income tax, the individual income tax, or the sales tax. Nevada, South Dakota, and Wyoming have no corporate or individual income tax (though Nevada imposes gross receipts taxes); Alaska has no individual income or state-level sales tax; Florida has no individual income tax; and New Hampshire and Montana have no sales tax.”

The Tax Foundation offers New Jersey, for example, which “is hampered by some of the highest property tax burdens in the country, has the highest-rate corporate income taxes in the country, and has one of the highest-rate individual income taxes. Additionally, the state has a particularly aggressive treatment of international income, levies an inheritance tax, and maintains some of the nation’s worst-structured individual income taxes.”

Ouch New Jersey. That hurts. But California has most of the same taxes. Only Proposition 13 keeps our property taxes somewhat in check.

California has the highest gas tax, personal income income tax, and state sales tax in the country. Ouch again – especially right now with such high inflation.

The 10 lowest-ranked, or worst, states in this year’s Index are:

41. Rhode Island
42. Hawaii
43. Vermont
44. Minnesota
45. Maryland
46. Massachusetts
47. Connecticut
48. California
49. New York
50. New Jersey

Here are California’s individual tax rates from the Tax Foundation:

The 10 best states in this year’s Index are:

1. Wyoming
2. South Dakota
3. Alaska
4. Florida
5. Montana
6. New Hampshire
7. Nevada
8. Utah
9. North Carolina
10. Indiana

“The absence of a major tax is a common factor among many of the top 10 states.”

As for California’s death tax, as Jon Coupal reported, “for 35 years we haven’t had a death tax, until the narrow passage of Prop. 19 in 2020.”

“Proposition 19 resurrected the Death Tax on hard-working families and put their homes, businesses, and legacy at risk. While it was cleverly disguised as a benefit for the elderly and disabled communities, Prop. 19 caused more harm than good.”

“Prop. 19’s Death Tax unleashed a callous tax increase on Californians who are grieving the death of a loved one. The passing of Prop. 19 eliminated the taxpayer protections of Prop. 58 and Prop. 193 from the state constitution. These protections guaranteed properties wouldn’t be reassessed upon the passing of parents and grandparents — enabling children and grandchildren to keep their family home or business.”

Senator Kelly Seyarto (R-Murrieta) held a press conference in May 2023 introducing Senate Constitutional Amendment 4, to restore taxpayers’ property rights by reversing the state’s “death tax” written into in Proposition 19. Deviously titled “the Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” Prop 19 passed in 2020 by voters who were deceived.

SCA 4 would reverse one of the largest property tax increases in state history, a little-noticed provision of Proposition 19 that revoked the ability of families and parents to pass property to their children without any change to the property tax bill, according to the Howard Jarvis Taxpayers Association.

Sen. Seyarto said SCA 4 will allow Californians to keep their childhood homes and family businesses when their parents or grandparents pass away.

Except Democrats killed SCA 4 only days after Senator Seyarto’s press conference, and I anticipate they will again in 2024.