Midnight Tax Hikes: Business Coalition, Assm Tangipa Blasts New Taxes in Record-Breaking California Budget

In the dead of night, California Democrats advanced a record $355 billion budget that includes significant new tax increases on digital software, insurance, and payroll-related costs, prompting sharp warnings from business groups and Republican Assemblyman David Tangipa.

Tangipa took to X late Monday night with a blunt video message titled “MIDNIGHT TAX INCREASES!” 

“In the dead of night, California legislators passed massive new taxes on insurance, digital software, and employee payroll taxes,” Tangipa said. “Don’t let anyone fool you this isn’t the federal government’s fault. The math isn’t mathing.”

🚨 MIDNIGHT TAX INCREASES!

In the dead of night, California legislators passed massive new taxes on insurance, digital software, and employee payroll taxes.

Don’t let anyone fool you this isn’t the federal government’s fault. The math isn’t mathing.

California just passed a… pic.twitter.com/S5w0Ih11R0

— David Tangipa (@DavidTangipa) June 16, 2026

He noted that California just passed a record $355 billion budget with record revenue, yet Democratic leaders continue to blame the President. For context, Tangipa pointed out that the state budget was around $170 billion just 10 years ago and has now more than doubled, while life in California has not become any easier or safer for residents.

“Sacramento has an insatiable appetite for your hard-earned money,” Tangipa warned. “If you’re not paying attention, they will keep taking more.”

The California Taxpayers Association (CalTax) and a broad coalition of business organizations released a detailed floor alert on June 15 opposing two budget trailer bills–AB 122/SB 122 and AB 176/SB 176— that form the core of the new tax measures.

The taxes being considered in the Assembly would increase costs for consumers, harm businesses, undermine investment and weaken California’s economic competitiveness. Affordability is a top concern for Californians, and these bills would move the state in the wrong direction. pic.twitter.com/G5l3PAc8vl

— CalTax (@CalTax) June 16, 2026

In a post amplifying the coalition’s concerns, CalTax stated: “The taxes being considered in the Assembly would increase costs for consumers, harm businesses, undermine investment and weaken California’s economic competitiveness. Affordability is a top concern for Californians, and these bills would move the state in the wrong direction.”

The coalition letter argues that the bills would:

• Expand California’s sales and use tax to digitally delivered prewritten software and Software-as-a-Service (SaaS) products, affecting tools used for payroll, accounting, cybersecurity, e-commerce, and countless other business operations.
• Permanently limit business tax credits, including the research and development (R&D) tax credit, weakening incentives for innovation and job creation in key sectors.

The groups warned that these changes would create tax pyramiding, embedding higher costs throughout supply chains and ultimately raising prices for consumers on everyday goods and services.

The opposition was signed by dozens of organizations, including the California Chamber of Commerce, Silicon Valley Leadership Group, TechNet, California Business Roundtable, California Retailers Association, California Bankers Association, Honda, and multiple local taxpayer and chamber groups.

The tax proposals come as part of the final budget package amid California’s ongoing cost-of-living crisis and federal fraud investigations, yet the Democrat supermajority spends at record levels on noncitizens, homelessness, education, and fighting “climate change.”

Tangipa and the business coalition contend that Sacramento’s approach, massive spending paired with new and expanded taxes, continues a pattern that has made California less affordable and less competitive, despite repeated promises to address the state’s affordability challenges.

The California Globe will continue tracking these budget-related tax measures as final votes approach.