The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

California Businesses Don’t Pay Taxes

Jun 20, 2022

According to the State of California, after the pandemic started, California borrowed $20 billion from the Federal Government to pay for unemployment benefits. As reported, this unemployment-related debt is as much as that of all other 49 states combined. The main reason is that California businesses pay very, very low unemployment taxes.

California businesses pay a tax on only the first $7,000 a worker earns each year for unemployment insurance. This is a flat tax, amounting to only $5.67 per week for each worker for unemployment insurance. This tax is so low because the California politicians and officials, which serve these businesses, designed it as such.

Because it is a flat tax, a company that employs a very low-wage part-time worker making, for example, $7,000 per year and a vice president or a senior engineer making $200,000 per year pay the same unemployment tax for both employees each year.

Most other states also have a flat tax for the unemployment benefits, but their base wage is much higher. For example, the state of Washington taxes businesses for the first $56,500 yearly earnings of each employee. Oregon’s taxable wage base is $43,800, and North Dakota and Utah both have tax bases over $38,000.

Not surprisingly, California’s unemployment benefits are extremely low, capped at $450 per week, with the average weekly benefit paid out in California in 2021 amounting to less than $330. Considering California’s very high costs of housing, rent, and living expenses, the unemployed workers cannot survive on this meager payment.

This miserable unemployment benefit is nothing to what the biggest and wealthiest companies of this world, which are located in California, and their shareholders profit from their low-wage workers’ long hours of hard work. But they do not want to pay more unemployment insurance because this is how they get richer.

These richest companies in the world also considerably decreased the corporate income tax they paid from only 9.5% in the early 1980s to less than 4.2% today. So, they take many bites from the same apple.

It’s not hard to see why some of the most profitable and biggest companies and wealthiest people in this world reside in California.