The increasing tax burden in California has been causing a lot of stress for many people. In the upcoming November election, voters were originally supposed to have the opportunity to participate in a statewide referendum on an initiative aimed at “making it difficult for the government to raise taxes.” However, this initiative has faced opposition from officials and organizations including Governor Gavin Newsom, leading to a legal battle.
On May 8th, the California Supreme Court held oral arguments in San Francisco, with Democratic Party leaders and unions on one side, and businesses and taxpayer groups on the other. Democratic Party leaders requested the California Supreme Court to remove an initiative called the “Taxpayer Protection and Government Accountability Act” from the November election ballot.
Opponents such as Newsom, the California legislature, and unions argue that this initiative, initiated by the business sector, aims to illegally amend the California Constitution and undermine the government’s fundamental functions. Lawyers representing the state government told the judge during the hearing, “Since the establishment of the state government, the legislature has had the highest tax power.”
Those in favor of the initiative argue that Californians are already struggling to afford increasing tax burdens and costs, and that the government’s tax policies lack accountability and transparency. The current loopholes not only weaken previous voter-approved tax accountability measures, but also allow unelected bureaucratic bodies to thrive, necessitating a change.
In August 2022, with support from over 1.4 million voters, the “Taxpayer Protection and Government Accountability Act” became one of the referendum measures on the 2024 election ballot.
The three key points of the referendum include: giving voters the right to approve or reject all new state and local taxes; enhancing accountability and transparency to ensure elected officials more effectively use taxpayers’ money; and preventing politicians from using disguised “hidden taxes” to increase government service costs.
The referendum also requires that when the government proposes new tax increases, it must explain the duration of the new tax, the projected annual revenue, the intended use of the tax revenue, as well as the ballot title and summary.
If the referendum appears on the November election ballot as scheduled and voters cast a “Yes” vote, they support amending state law to define all state and local levies, charges, and fees as taxes; requiring not only a two-thirds vote of the state legislature for new taxes but also voter approval. Local taxes would require a two-thirds vote of local voters.
A “No” vote would maintain the current system: new state taxes would only require a two-thirds vote of the state legislature or a simple majority in a statewide election; local taxes would be approved by local governing bodies or voter approval.
Since qualifying for the ballot over a year ago, Democratic politicians, organized labor unions, and other opponents have been working strenuously to block the “Taxpayer Protection and Government Accountability Act;” the Newsom administration also filed a lawsuit last fall seeking to remove this referendum from the ballot.
California taxpayers pay high gasoline taxes, sales taxes, and personal income taxes, yet California’s poverty rate and total homeless population remain among the highest in the nation. During the pandemic, California Democrats proposed taxing the wealthiest residents, hastening the departure of many businesses and wealthy individuals from the state.
On the other hand, California’s financial outlook is not optimistic: the state government’s budget needs are increasing, and deficits are growing. The California Legislative Analyst’s Office previously predicted a massive $68 billion deficit for the 2024-25 fiscal year.
California’s annual budget was $98 billion in 2011; reached $190.3 billion in 2018; $222 billion in 2020-2021; and the total budget for 2022-2023 reached $286.4 billion.
Supporters of the “Taxpayer Protection and Government Accountability Act” referendum seek to change the current state of California through a statewide vote; however, opponents believe it will worsen deficits, create budget imbalances, and threaten essential public services. The final decision will be made by the judge, who must decide in the coming weeks whether to allow the referendum to appear on the ballot or to remove it. ◇