Will The Coronavirus Pandemic Lead To Tax Increases?

In January, Gov. Gavin Newsom presented a proposed budget for fiscal year 2020-2021 which envisioned a several billion dollar increase in spending for existing programs as well as a host of new programs. But that was before COVID-19 arrived at our shores.

In over the course of just three weeks in March, it became obvious that the original budget plan would have to be scrapped because of the most rapid economic downturn America has ever seen.

So it was with great interest that all those who follow California politics were watching last Thursday as Newsom released the “May Revise” of the budget. To no one’s surprise, the huge dive in state revenues forced the governor to slash $19 billion from January’s initial plan.

According to the governor’s Department of Finance, the budget deficit is $54 billion. But this figure may be overstated in order to present to the public the worst possible case. The non-partisan Legislative Analyst projected the deficit to be as low as $18 billion with a worst case scenario of $31 billion.

The question is whether the budget shortfall will lead to a demand for tax increases. Taxpayers can also take some comfort that there are no immediate plans for broad-based tax increases. The governor proposed two tax hikes, a suspension of a business deduction for what are known as “net operating losses” and a tax on vaping products.

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Comments

  1. ANYTHING and EVERYTHING Gruesome does leads to tax increases.

  2. If the deficit is going to be 54 billion all he has to do to cover the shortage is drop the stimulus payments for illegals and remove their medical coverage. This would cover the whole deficit. They have broken the law to get here and they continue to break the law by staying. The whole idea is to punish criminal behavior not reward it

  3. In the area I live in people are selling their houses, I have never seen so many people trying to get out of this shit state. The DEMOCRAPS care only about the ILLEGALS and give them hard earned taxes that legal citizens have had to pay… The democraps are taking money away from legal Californians AND GIVING IT TO THEIR ILLEGAL VOTING BASE TO MAKE THEM COME OUT IN NOVEMBER AND VOTE…FACT

  4. Of course there will be tax increases! Likely disguised as a $10 billion “water bond” or some such fraud on the population of sheep in this State.

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