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Rescinded Proposals for Major California Tax Increases

Client Updates

Proposed Significant New Taxes to Fund Single-Payer Health Care in California Have Been Rescinded, For Now

Recent proposals to create major tax changes in order to fund Cal-Care, a single-payer California healthcare system, were short-lived in the California Assembly.

We issued a Tax Alert last month advising California taxpayers of legislation introduced by California Assembly Member Ask Kalra (D-San Jose) and Alex Lee (D-San Jose) that included a significant package of new taxes and the creation of a single-payer California healthcare system funded by the new tax revenues. The proposed taxes were significant: a new 2.3% business gross receipts tax, a new 1.25% payroll tax on businesses with at least 50 employees, an additional payroll tax on employers with employees earning at least $49,000, and a personal income tax surcharge for individuals earning $149,509 or more.

Legislation introducing a single-payer Cal-Care healthcare system failed to pass the Assembly on January 31, 2022. The bill’s authors have removed the proposed legislation from the floor, and also pulled corresponding tax legislation needed to fund the system.

Cal-Care proposals have been rescinded, but only for now. Taxpayers should anticipate future proposals and efforts to adopt new tax regimes to fund a single-payer healthcare system in the future.

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