Written by Gordon Webster, Jr.
The latest “Job Killer” legislation to see the light of day in Sacramento is AB 398, authored by Assemblymember Kansen Chu (D-San Jose), which institutes a headcount tax on employers.
In the middle of pandemic, when employers are simply struggling to say afloat, this asinine proposal adds a tax of $275 per employee for “an entity, including, but not limited to, a limited liability company, corporation, or limited liability partnership, that has more than 500 employees that perform any part of their duties within the state.”
The California Chamber of Commerce, which identifies and has a strong record of defeating Job Killers, sent an opposition letter to lawmakers making the common sense argument that AB 398 would “strongly disincentivize” employers to hire more than 499 employees, since that 500th employee brings along $137,500 in new taxes.
“During times of economic prosperity AB 398 would be a job killer,” the CalChamber states in the letter. “During this time of economic crisis, AB 398 is catastrophic.”
The CalChamber also notes the old tax policy adage: If you want less of something, tax it. No one in their right mind would advocate a position of less jobs for California. So the reasoning behind AB 398 makes little sense, other than making us less competitive in the eyes of large employers.
Like the split-roll tax measure that has qualified for the November ballot, AB 398 is a wolf in sheep’s clothing. The revenue collected would go to K-12 education, but at what cost? What kinds of jobs can California students expect to earn when they graduate into an economy where regressive measures hobble job creation?