Later he clarified his assertion, saying California’s taxes on low-income residents are comparatively decrease than these in purple states.
“Catering to big business and the rich is also why red states tax their lowest earners far more than California does. They punish you when you’re struggling, but give you a free pass when you’re wealthy,” the governor stated.
There’s some reality to that. California’s very progressive earnings tax system, with the nation’s highest marginal charge of 13.3%, makes its state finances extremely depending on taxing incomes of its wealthiest residents, whereas these in low- and moderate-income brackets pay little or no earnings taxes.
Nonetheless, taxes imposed by state and native governments put California within the highest ranks of the 50 states, not solely in complete — greater than $400 billion a 12 months from all sources — however in per capita phrases — greater than $10,000 every — and as a proportion of its $3.6 trillion in complete private earnings.
The Washington-based Tax Basis ranks Californians’ state and native tax burden forty eighth, one of many highest within the nation, out-taxed solely by New York and New Jersey.
“California combines high tax rates with an uncompetitive tax structure, yielding one of the worst rankings on the Index,” the Tax Basis says.
The state’s $322 billion 2025-26 finances counts on $297 billion from a few dozen completely different taxes, whereas cities, counties, faculty districts and different native companies absorb one other $100 billion or so, primarily from property taxes and native shares of the gross sales tax.
The finances anticipates $207 billion basically fund revenues. Thus far income is working a bit forward, however normal fund spending is budgeted at $226 billion. Maneuvers to cowl the hole embody shifting $7.1 billion from emergency reserves, pushing the June 2026 state payroll into the next fiscal 12 months and tapping particular funds for loans.
State finances consultants name it a “structural deficit” that can proceed indefinitely within the absence of both sharp spending reductions or tax will increase.
There’s little urge for food for the previous in a Legislature dominated by Democrats however some help for the latter. The California Taxpayers Affiliation not too long ago reported that legislators proposed greater than $16 billion in new taxes and charges throughout the not too long ago concluded 2025 session.
The battle over taxes seems to be headed for the 2026 poll, with two pro-taxation measures being pushed by public worker unions and different left-leaning teams and one that might create a brand new hurdle for native tax will increase.
One proposal, backed by the California Academics Affiliation, would make everlasting a short lived tax improve on high-income Californians, first accredited in 2012 to shut a finances deficit and later prolonged to 2030 by way of a poll measure. All of its income, as a lot as $15 billion a 12 months, would go to Ok-12 colleges and group schools.
A second measure, sponsored primarily by the Service Staff Worldwide Union-United Healthcare Employees West, would impose a one-time 5% tax on the wealth of California’s billionaires, elevating about $100 billion, which might be spent on the charge of $25 billion a 12 months to cowl the state’s structural deficit and prop up well being care providers.
The third, sponsored by the Howard Jarvis Taxpayers Affiliation, would overturn a state Supreme Court docket ruling and re-impose a two-thirds voter approval requirement on all proposed native taxes designated for explicit functions.
California is a blue state with comparatively excessive taxes now. Do voters need to add extra or make it tough so as to add extra?
Dan Walters is a CalMatters columnist.
