Tax hike on California employers spurs plea for help to cover Gavin Newsom’s ‘failures’
California Republicans beg Congress to shield employers from Newsom’s $20 billion unemployment debt that other states already repaid.
California employers face a 5.2 percent federal payroll tax hike, nearly nine times the rate in debt-free states, because Gov. Gavin Newsom and Democratic lawmakers refused to repay $20 billion in unemployment insurance obligations.
Senate Minority Leader Brian Jones and fellow Republican state senators have now passed a joint resolution pleading with Congress to suspend those automatic tax increases. The burden lands hardest on small businesses, which make up 99.8 percent of all California firms and support 7.6 million jobs.
While most states used federal stimulus money to retire their pandemic-era UI debts, California spent its allocation on infrastructure, homelessness programs and other priorities instead. The result is an outlier status that Jones calls simple buck-passing: “Every other state paid down its debt, but not California.”
Employers are already on the hook for an extra $42 per worker this year, a figure projected to climb annually until the balance disappears. California Business Roundtable President Rob Lapsley labels it “the greatest hidden tax,” warning that penalties could surpass $400 per employee if nothing changes. The state’s Employment Development Department also disbursed billions in fraudulent claims while legitimate businesses stayed shuttered under extended lockdowns.
Jones’s resolution argues Congress should not penalize employers for state decisions that inflated the debt, prolonged shutdowns, failure to curb fraud estimated at $20 billion, and notes the irony of a governor ignoring a bill that would trigger collection agents against any ordinary citizen. “If you don’t pay a bill, you’ll get hounded by a collection agency,” Jones said. “But apparently if you’re the governor of California, you can ignore the tab and force someone else to pick it up.”
The federal Department of Labor has already dispatched a “strike team” to California to investigate theft and abuse. Whether Congress will intervene remains the decisive question that small-business owners cannot afford to leave unanswered.
Original reporting: New York Post.
More in California
- UC Berkeley Lab Proposes New Civic Framework for California’s Next Governor
A research-driven agenda calls for institutionalizing 'co-governance' to address low public trust and lack of resident influence in state decision-making.
- Five Tax Measures on California’s Ballot Aim to Reshape State Finances
Propositions 3, 40–43 would alter income, wealth and local taxation rules—marking the highest number of tax measures on a general election ballot since 1994.
- Catalina Helicopter Crash Highlights Risks of Island Medevac Flights
A medical evacuation chopper carrying Catalina Romero, pilot, and nurse Jessica Devries crashed into the ocean shortly after takeoff, killing all three; federal investigators are assessing causes including night flying, spatial disorientation, and the island’s challenging Pebbly Beach heliport.