Today, California Senate Democrats approved a 250% tax increase on employers when they voted to kill Senate Joint Resolution 15 (SJR 15) in the Senate Labor, Public Employment and Retirement Committee. The resolution, introduced by Senate Minority Leader Brian W. Jones (R-San Diego) and co-authored by all members of the Senate Republican Caucus, asked Congress to stop the looming federal tax hike on California businesses caused by Governor Newsom’s decision not to repay the state’s federal unemployment insurance (UI) debt.
“Newsom is once again making Californians pay for his mistakes and his friends in the legislature unsurprisingly continue to kowtow to his damaging agenda,” said Jones. “The government failed the people when it mandated arbitrary shutdowns, hurt businesses, and allowed billions of taxpayer dollars to be lost to fraud. Instead of doing everything in their power to protect more jobs from being lost, the majority party doubled down on failure by rejecting this simple solution.”
California is the only state in the nation to not pay back its federal UI debt, which stands at over $20 billion. Governor Newsom could have prioritized paying off the debt when the state had a budget surplus, but he chose not to. As a result, California employers will be hit with a 250% federal payroll tax increase. The new tax rate, 5.2%, is nearly nine times higher than in states that are debt free.
The burden will be especially hard on small businesses, which account for 99.8% of all business in the state and support 7.6 million jobs.
Paying of the UI debt has remained one of Senate Republicans’ top budget priorities this year, but the majority party has rejected each of their efforts to address the issue.
“Common sense continues to be hard to find in Sacramento,” said Sen. Tony Strickland (R-Huntington Beach), vice chair of the Senate Labor, Public Employment and Retirement Committee. “Instead of paying off our debt when we had the money, Governor Newsom and the majority party in Sacramento have an addiction to spending. Their deliberate choice to not confront reality will kill more jobs and opportunity and make life even more unaffordable in California.”