California's Budget Projects a $22 Billion Surplus, Yet Wants Billions More in New Taxes | Citizens Against Government Waste
The WasteWatcher: The Staff Blog of Citizens Against Government Waste

California's Budget Projects a $22 Billion Surplus, Yet Wants Billions More in New Taxes

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


After 32 consecutive victories on the TV game show “Jeopardy,” James Holzhauer, a professional sports gambler from Las Vegas, Nevada, saw his incredible winning streak come to an end.  Finishing with $2,462,216 in total prize money, James fell just $58,484 short of the all-time record set by Ken Jennings in 2004 (it took Jennings 74 games to reach that mark).  While this is surely not the ending “Jeopardy James” had hoped for, he still goes home with just under $2.5 million.

Or so he thought.

According to the Action Network, Holzhauer’s winnings will face the wrath of a massive one-two tax punch from the federal and California state governments.  Although Holzhauer is a Las Vegas resident, where there is no state income tax, he will be subject to the Golden State’s maximum tax bracket, since the show is taped in Los Angeles.  Taxed as ordinary income at a combined rate of 47.5 percent, James will net just more than $1.29 million in prize money.

Although a million dollars in prize money is certainly nothing to sulk about, it does once again shine a light on California’s absurd tax rates and the plethora of new tax proposals that have flood out of the state legislature this session.  Even with a record $21.5 billion surplus in Gov. Gavin Newsom’s (D-Calif.) budget, he still requested more than $2 billion in new taxes.  The California Tax Foundation also estimates more than $6.2 billion in new taxes and fees on soda, batteries, painkillers, telephones, tires, and much more.

Another concerning proposal in Gov. Newsom’s budget includes a 95-cent tax on every water bill as part of a clean water initiative.  When legislators were hesitant to back another tax while there is a $21.5 billion surplus, lawmakers who supported to the water tax tapped into the “cap-and-trade fund,” which can only be used for climate change initiatives.  George Skelton of the Los Angeles Times wrote that one staffer who helped craft the budget “rationalized that if someone had to drive a car to buy bottled water, it would emit greenhouse gas emissions” and therefore drawing money from the fund was legal.  “I think everyone has communicated to Gov. Newsom that it would be a bad idea,” said Sen. John Moorlach (R-Costa Mesa).

Even as California’s budget woes are looking up, the Golden State still cannot seem to shake its reprehensible addiction to more taxes.  “We’ve got a $22 billion surplus, revenue remains strong, so the threshold question is why are we discussing tax hikes,” said Jon Coupal, President of the Howard Jarvis Tax Association.  Gov. Newsom and California legislators should leave this session on a high note and avoid any and all new taxes.

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