California Lawmakers Debate Raising Taxes to Fund Health Care for Lawbreakers
Have California state lawmakers not heard about the border crisis?
As the Golden State’s legislature embarks on its 2022 session, policy-makers have begun an apparent bidding war to fund “free” coverage for foreign citizens illegally present in the United States. In his latest budget submission, Gov. Gavin Newsom, D-French Laundry, proposed spending $2.7 billion to expand Medicaid coverage to illegal immigrants. Believe it or not, his is the moderate proposal.
In a case of the left hand competing against the far-left hand (or the far-left hand competing against a farther-left hand), legislators want to raise taxes to pay for a single-payer system that would also cover all California residents “without regard to the individual’s immigration status.” Both proposals would, as none other than Hillary Clinton has astutely observed, prove a magnet for even more migration to the United States, at a time our immigration system is already stretched beyond the breaking point.
Ever-Growing Tax Increases?
Newsom’s $2.7 billion proposal would expand Medicaid to all low-income residents, regardless of immigration status. The San Francisco Chronicle reported “there’s little doubt it will sail through the Democratic-dominated Legislature.” In fact, some lawmakers want Newsom to go further and fund a system of state insurance subsidies for illegal immigrants with incomes above the Medicaid eligibility level, who cannot qualify for federal insurance subsidies on the Obamacare exchanges.
Newsom insists his plan would not require tax increases, instead being funded by a state surplus—which comes in no small part due to the massive federal bailout of states included in the spending spree Democrats rammed through Congress last year. But the single-payer bill being considered in the legislature would require tax increases—quite a lot of them.
Earlier this month, California lawmakers finally introduced a menu of tax increases to pay for (some of) their single-payer proposal. Among the tax hikes included:
- A 2.3 percent excise tax on all business revenue above $2 million, “for the privilege of doing business in this state;”
- A 1.25 percent payroll tax for all businesses with more than 50 resident employees;
- An additional 1 percent payroll tax on all resident employees earning more than $49,900; and
- A surcharge for all those with taxable income above $149,509, which starts at 0.5 percent but rises to 2.5 percent for those with taxable income above roughly $2.5 million.
The tax increase measure includes two loopholes designed to raise far more revenue than it would appear at first glance. For starters, while the surcharge thresholds are indexed to inflation, the payroll tax threshold is not.
In effect, then, the legislature has proposed a 2.25 percent payroll tax, because all employees’ wages will eventually exceed $49,900. Given the way inflation keeps skyrocketing under the Biden administration, most employers will exceed those thresholds sooner rather than later.
Second, the tax increase measure would allow lawmakers to raise infinite amounts of revenue to fund the single-payer system. California’s Constitution currently requires a two-thirds majority in each chamber to pass tax increases, and generally imposes spending limits on state government.
But the tax increase measure, which requires public approval as a constitutional amendment, would exempt the single-payer system from the spending caps, and in the future allow a simple majority of the legislature “to increase any or all of the tax rates imposed…upon an economic analysis determining insufficient amounts” to pay for the single-payer program.
In other words, California’s Democratic supermajority wants to have an unlimited tap on raising taxes and spending to fund its socialized medicine scheme. Make no mistake: Raising taxes on a regular basis would be necessary to fund a single-payer health care system. As a 2014 paper examining single-payer in Vermont admitted, “We would need to accept some increases in tax rates in the same way that we accept increases in insurance premiums today.”
As for one reason taxes would perpetually need to rise to fund California’s single-payer system, one need only consult Hillary Clinton’s testimony to Congress in September 1993 about the effects of extending subsidized health coverage to “illegal aliens”:
We do not think the comprehensive health care benefits should be extended to those who are undocumented workers and illegal aliens. We do not want to do anything to encourage more illegal immigration into this country. We know now that too many people come in for medical care, as it is. We certainly don’t want them having the same benefits that American citizens are entitled to have.
Clinton was right. Hard-working taxpayers in California—or in any other state, for that matter—should not see their taxes go up, likely in perpetuity, to fund health coverage for those who came to the United States illegally. That is little more than common sense, and the fact that so many Democrats now reject it speaks volumes to that party’s radicalized state.
This post was originally published at The Federalist.