Issues & Insights

Fact-Checked: Gavin Newsom Shouldn’t Have Dared Us

Photo: Gage Skidmore, Creative Commons Attribution-Share Alike 2.0 Generic license

 

In an interview performance that has been described as “unhinged,” “odd,” “testy,” and “angry,” Gov. Gavin Newsom claimed Texas ​​middle-class families “pay more taxes than middle-class families in California.”

Look that up,” he said in a virtual meeting with editorial and opinion writers from the McClatchy chain’s California newspapers. “That’s a fact”

But we didn’t have to look it up. We already knew he was wrong. Having just completed a policy brief outlining the exodus of businesses and residents from the state, we were familiar with the heavy tax burden that is laid on all Californians.

Here are the comparisons:

  • The rates in the middle of California’s 10 personal income tax brackets are 8% (starting at $92,788 in annual adjusted income for married couples filing jointly) and 9.3% (starting at $117,268 in annual income), says the Tax Foundation. The latter is higher than the top rate in most other states, yet it ensnares more than a few families in California who are considered middle class. Texas has no income tax.
  • Fuel taxes, hardest on lower- and middle-income Americans, are punitive in California, where the combined state taxes on gasoline are 67 cents per gallon. That’s more than three times the levy (20 cents per gallon) in Texas.
  • Vehicle registrations are $51.75 per vehicle in Texas. In California, the fees are several hundred dollars for a modest car a middle-class family would drive.
  • The lower and middle classes are also disproportionately impacted by sales taxes, since they take a larger share of their incomes compared to the wealthy. Here, there’s little difference between the two states. The Tax Foundation figures the combined state and average local sales taxes in California are 8.68%, ninth highest in the nation. Texas is 14th at 8.19%.
  • It’s true that property taxes are higher in Texas. Thanks to California’s Proposition 13, the state ranks no worse than 20th. The effective rate is about 1%, when other fees and taxes are figured in. Texas rate is about twice that – 1.9%. But any advantage to Californians is negated by the state’s housing crisis. The median-price home in California was $811,170 in July, according to the California Realtors Association, while the Texas Quarterly Housing Report reports the median-price home there is $300,490.
  • Occupational licensing regulations, which impose “unnecessary obstacles along the pathway that families have traditionally used to obtain a middle-class lifestyle,” are in effect a tax. The average fee in California, says the Institute for Justice, is $486, a little less than half of what is required in Texas, $253. The Lone Star state also licenses fewer occupations (37) than does California (76), though the gap could be far greater since the Golden State, whose “tangle” of licensing laws is virtually impenetrable, admits it “has no way of knowing how many occupations it licenses.”
  • A host of other fees and taxes that choke California’s middle class include cell phone charges (higher than in Texas), which have increased sharply since 2014, tire fees, even mattress recycling fees.

One would be tempted to think that for all the taxes Californians pay, they would get a fair return. They don’t. Personal finance web site WalletHub has ranked the states on their taxpayer returns on investment and only Hawaii keeps California out of the bottom spot. Texas? In the top 10 at No. 7.

As tough as life is for California’s middle class, it’s likely to become even more unbearable. Newsom failed to mention that “this damn state” he loves so much is constantly looking for ways to raise taxes.

“It’s income tax time across America, but in the California Legislature it is always tax time,” Los Angeles Times columnist George Skelton, never confused as an advocate of small government, wrote in May. “Some Democrats never stop trying to raise taxes.”

One day later, Robert Gutierrez, president and CEO of the California Taxpayers Association, and Allan Zaremberg, retiring California Chamber of Commerce president and CEO, pointed out that proposed tax hikes are neither new nor rare in California. In every session, lawmakers “introduce myriad bills aimed at increasing taxes and fees on individuals, businesses and consumer products.” 

Newsom would have fared better had he moved on to another topic during the interview. Instead, apparently desperate to save himself, he blurted out a claim that’s easily debunked. The pressure of the recall campaign must be getting to him.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.  Wayne Winegarden is a senior fellow in business and economics at the Pacific Research Institute.

Will You Help Us In The Fight For Free Speech?

Issues & Insights was founded by seasoned journalists of the IBD Editorials page. Our mission is to provide timely, fact-based reporting and deeply informed analysis on the news of the day -- without fear or favor.

We’re doing this on a voluntary basis because we believe in a free press, and because we aren't afraid to tell the truth, even if it means being targeted by the left. Revenue from ads on the site help, but your support will truly make a difference in keeping our mission going. If you like what you see, feel free to visit our Donations Page by clicking here. And be sure to tell your friends!

You can also subscribe to I&I: It's free!

Just enter your email address below to get started.

Share

11 comments

  • California might me better than Florida with weather (Florida’s humidity is high, but you have wildfires, chances of earthquake events ) but I’ll take Florida any day. My house is valued at about $220,000, built in 66, 2br,2 1/2 bath, good size łot in a neighborhood. I paid $550 in property taxes last year. 7.25% sales tax. My house is nice but doesn’t have a poo can you even buy a shed in Ca for that?

  • Governor Newsom Supports an Energy Dysfunctional California. Residents continue to demand more energy while the State pursues increases for the costs of that energy

    California professes to be the leader of everything and spouts voracious pride of being the State that imports more electricity than any other state, and through its dysfunctional energy policies has forced California to be the only state in contiguous America that imports most of its crude oil energy from foreign country suppliers to meet the energy demands of the state. The Governor is proud to “leak” emissions to other countries that have significantly less environmental controls and have California residents pay higher costs for energy.

    In a state with the highest costs for electricity and fuels, he continues to do everything possible to further INCREASE the costs for electricity and fuels for its 40 million residents. Those huge regressive costs have not boded well for the bottom half making less than $20 an hour.

    https://www.capoliticalreview.com/capoliticalnewsandviews/stein-governor-newsom-supports-an-energy-dysfunctional-california/

  • Don’t forget all the fees the DMV makes you pay for registration, a fee to go into the DMV, a fee to go to a kiosk, a fee to do it online. Try to pay JUST the fee, in cash, at the DMV – literally impossible.
    Someone should write an article on THAT.
    There is a fee for wood, a fee for electronics recycling, a fee for grocery bags… someone should tally up all those fees too.

  • Correction: The average occupational licensing fee in California is *almost double* that required in Texas, not “a little less than half!”

    • My guess is that the author meant to write “The average fee in California . . . is $486, a little less than *twice* what is required in Texas, $253.”

      It also would not surprise me if the author confuses half with twice. The level of arithmetic and economic illiteracy in America is staggering.

  • The issue is, Gavin and everyone else in the Sacramento Capitol building, live in a box of luxury. He thinks he’s right because everyone else there thinks they are right at well. It’s hard to live in reality when you live in an echo chamber.

  • Kerry and Wayne: Please re-examine your property tax statement regarding California. True the base rate is 1% of the purchase price when purchased. Let me term that “Pi” (Initial Price). From Pi, the base rate may increase no more than 2% yearly, or 1.02 times Pi, then compounded annually. But Cali has a slew of ‘special assessments’. In the SF Bay area I have over a dozen – four separate ones for various schools (two for elementary, 1 for high school and 1 for the local community college district). The result – a residence owned for 20 years, a property tax bill of 1.4 to 1.5% of the current value (FMV) is common. For a residence purchased in the past 3 to 4 years, the rate may be under 1% of the FMV due to the 20% increase in property values over that time, but it is certain those purchasers are still paying at least 1.4 to 1.5% in property taxes per year as measured from their Pi.

Subscribe to Issues & Insights via Email

Enter your email address to subscribe to I&I and you can receive notifications of new articles in your email. It’s simple, and free.

Join 5,439 other subscribers

We Could Use Your Help

Will you help us fight for honesty in journalism and against the tyranny of the left? Issues & Insights is published by a team of volunteers who believe in free speech and in quality journalism. If you like what you see, leave a donation by clicking on the Tip Jar above. You can also set up regular donations if you like. Ad revenue helps, but your support will truly make a difference. (Please note that we are not set up as a charitable organization, so donations aren't tax deductible.) Thank you!

About Issues & Insights

Issues & Insights is run by the seasoned journalists behind the legendary IBD Editorials page. Our goal is to bring our decades of combined journalism experience to help readers understand the top issues of the day. We’re doing this on a voluntary basis, because we believe the nation needs the kind of cogent, rational, data-driven, fact-based commentary that we can provide. 

%d bloggers like this: