The association representing California’s CPA profession said Tuesday that it opposes a November ballot measure that would impose a one-time tax on billionaires to help fund healthcare programs in the state.
CalCPA said it doesn’t support the measure, called Proposition 40, because “it would create a fundamentally new and difficult-to-administer tax framework that raises significant administrative feasibility concerns.”
“The proposal relies on valuing complex and often illiquid assets, increasing the likelihood of valuation disputes, litigation, and uncertainty for taxpayers, tax practitioners, and tax agencies. In addition, its retroactive tax provisions undermine taxpayer certainty by changing the rules after the fact,” CalCPA said in a media release on Aug. 25. “The Legislative Analyst’s Office analysis of Proposition 40 notes many of these practical implementation concerns and long-term risks to income tax revenues from taxpayer behaviors in response to the measure.”
Proposition 40 would impose a one-time 5% tax on individuals and trusts with more than $1 billion in covered assets, payable over five years.
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The proposal was crafted by a healthcare workers’ union to compensate for an estimated $100 billion in federal healthcare cuts approved by President Donald Trump and congressional Republicans that it argues will cause devastating harm to millions of California’s most vulnerable residents.
Democrats and their allies are divided over the proposal. Some, including Gov. Gavin Newsom, argue it will prompt the wealthy to flee California, further harming its volatile budget, which is dependent on the state’s richest residents. The California Democratic Party and leading progressives support the measure, with Sen. Bernie Sanders (I-VT) calling it a modest tax necessary to help Californians struggling because of cuts imposed by Republicans to pay for tax breaks for the wealthy.
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Sanders spoke at a pro-billionaire tax rally in California last February, which also featured a lengthy performance by Rage Against the Machine guitarist Tom Morello.
One of the biggest critics of Proposition 40 is a group called Building a Better California, which is funding two other ballot measures that could block the billionaire tax. Google co-founder Sergey Brin has reportedly poured $102 million this year into Building a Better California.
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The nonpartisan group is putting its weight behind Proposition 41 and Proposition 42, which billionaire tax supporters say are meant to trick voters into nullifying a wealth tax.
CalCPA is supporting Propositions 41 and 42.
Proposition 41 would require audits for new state special taxes. It would bar new state taxes that exempt their revenue from a state spending limit. Proposition 42 would prohibit new taxes on “retirement holdings, individually-owned assets, and other forms of personal savings.” It would bar retroactive taxes on past earnings.
While supporters of Propositions 41 and 42 say the measures aim to cut wasteful government spending, improve transparency, and protect retirement savings, both conflict with the proposed billionaire tax. That means they could block the billionaire tax from becoming law, according to the Legislative Analyst’s Office, which is the California Legislature’s nonpartian fiscal and policy advisor.
If Proposition 41 or 42 receives more approval votes than the proposed billionaire tax proposal, that would nullify the wealth tax.
On Proposition 41, CalCPA says it supports the measure “because independent audits provide voters with objective, credible information to inform decisions about public spending. Transparency, sound data, and independent review are essential to effective governance and reflect principles central to the CPA profession. CPAs provide businesses, nonprofits, governments, and the public with reliable information that supports sound decision-making. Proposition 41 applies these principles, giving Californians useful information to evaluate public programs, inform resource allocation, and promote responsible fiscal management.”
The association says it supports Proposition 42 “because stable, prospective tax policy promotes taxpayer certainty and reinforces confidence that the rules will not change after the fact. Clear and predictable tax laws make California’s tax system easier to administer, easier for taxpayers to comply with, and more consistent with sound principles of tax administration.”
CalCPA says its positions on the three ballot measures are grounded in the accounting profession’s expertise in tax, auditing, and financial accountability, along with its longstanding commitment to the public interest.
“Because CPAs help taxpayers navigate California’s tax laws and assess whether programs and controls are effective, CalCPA evaluated each measure for fair, consistent, and predictable implementation, as well as its potential effects on accountability and public confidence,” it said.
“Our positions reflect the accounting profession’s longstanding work to advance sound public policy,” Denise LeDuc Froemming, president and CEO of CalCPA, said in a statement. “Every day, CPAs help California taxpayers, businesses, and nonprofit organizations navigate complex tax laws and provide independent assurance that builds public trust. We evaluated each measure through that practical lens because Californians deserve tax policies that are clear, workable, and accountable.”
Photo credit: ABC10/YouTube
Tribune News Service contributed to this article.
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