The reality is that California businesses and households paying payroll taxes on domestic employees will have to pay the price as the state defaulted on a $20 billion federal loan to cover coronavirus-era shortfalls. I'm starting to wake up.
The issue came to light this week when restaurateur Andrew Gruel posted on social media about unexpected expenses.
The Hoover Institution, based at Stanford University, warned Regarding issues from over a year ago:
California businesses have largely disclosed that they are cosigners on nearly $20 billion in state loans from the federal government used to fill California's unemployment funding shortfall during the coronavirus pandemic. I didn't know. This ugly truth became clear when the state recently decided to suspend payments on this loan. If a state defaults on a federal unemployment insurance loan, federal law requires the state's businesses to repay the loan.
What makes this default even more egregious is that the state Employment Development Department's (EDD) stone-age IT systems opened the floodgates to bad actors, allowing more than $30 billion in fraudulent unemployment claims during the pandemic. . Those receiving fraudulent payments include an incarcerated felon, someone impersonating a one-year-old child and someone impersonating Sen. Dianne Feinstein. A single residential address received individual checks for approximately 60 people who filed from that address.
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The state's decision to default is inexcusable. California had a nearly $100 billion state budget surplus last year, thanks to the state's top earners, which could have been used to pay down debt. The state received $27 billion in coronavirus aid from the federal government that could have been used to pay down debt. The state's record $300 billion budget, plus the 2022-23 budget, could have paid off the debt. Even after defaulting, the state could have restarted payments this year to offset businesses' tax burdens, as planned in the 2023-24 budget. But as the state's finances continued to deteriorate, the state backed off payments and disbursements. Offsets increases in federal unemployment insurance taxes for businesses.
Households that employ legal immigrants and pay payroll taxes face a similar surprise tax increase penalty.
Californians may soon be asking for more. Recently Reason.com reported: “California's total long-term debt between state and local governments has quietly grown to more than $5 billion, making it the most indebted state in the nation.”
Joel B. Pollack is a senior editor at Breitbart News. Breitbart News Sunday Sunday nights from 7:00 PM to 10:00 PM ET (4:00 PM to 7:00 PM PT) on Sirius XM Patriot. he is the author of Agenda: What should President Trump do in his first 100 days?available for pre-order on Amazon. He is also the author of Trumpian Virtues: Lessons and Legacy of the Donald Trump Presidencynow available on Audible. He is the recipient of the 2018 Robert Novak Journalism Alumni Fellowship. Follow him on Twitter @joelpolak.
