Experts Challenge Newsom’s Tax Claims Comparing California with Florida and Texas

Recently, California Governor Gavin Newsom stated that his state’s tax system is superior to those in Florida and Texas, but experts argue that the data doesn’t support his claims.

In a post on X, Newsom highlighted California’s “most progressive tax rate in America” while criticizing the tax burdens in Florida and Texas. He mentioned, “The middle class in Texas pays more taxes than the middle class in California. It’s a great myth.” He suggested that only the wealthy move to California to avoid taxes.

This assertion has drawn criticism, including responses from conservatives and figures like Florida Governor Ron DeSantis. James Agresti, president of Just Facts, examined various aspects of Newsom’s statements to assess their validity.

Agresti pointed out that, on average, California collects around $10,000 per person in taxes, while Texas and Florida each gather about $5,000. He noted that California, being a high-income state, taxes approximately 14% of its economy, compared to Texas and Florida’s 9%.

According to a recent study, California’s personal income tax rate stands at 13.3%, the highest in the nation, while Texas and Florida do not impose state income taxes. In terms of property taxes, California’s rate is 2.8% of personal income, slightly below Texas’s 3.6% and comparable to Florida’s 2.6%. However, California’s tax rates can be lower when evaluating property tax as a percentage of home value, although the overall tax burden is notably heavier in various sectors.

Agresti asserted that Newsom’s conclusions likely stemmed from data from the Institute on Taxation and Economic Policy (ITEP), which he argues is flawed because it doesn’t fully account for all income or taxes.

ITEP claims that states like Texas and Florida appear to have lower tax burdens as they lack a broad personal income tax system, thus benefiting high earners. They rely more on sales, excise, and property taxes, which can affect low-income households significantly. Conversely, California employs a progressive tax system, placing more emphasis on high earners while attempting to balance the regressive taxes faced by lower-income individuals.

Critics point out that this view doesn’t encompass the entire tax landscape and that California remains more burdensome for high earners, investors, and businesses. Agresti contends that misinformation regarding tax burdens leads many to mistakenly believe that middle-income Americans face higher federal taxes than their wealthier counterparts.

Further analysis reveals that around 80% of voters mistakenly think that middle-income Americans pay higher federal taxes. In reality, reports indicate a federal effective tax rate of about 15% for the middle class, versus approximately 30% for the top 1% when accounting for all taxes.

Agresti also highlighted that more people have been leaving California for other states than moving in during Newsom’s governorship, with around 1.5 million more residents exiting than arriving.

Adding to the debate, Newsom has previously touted California as the fourth-largest economy globally, which Agresti critiques as misleading due to improper currency conversions. He argues that Japan’s economy is significantly larger than California’s when correctly analyzed.

With data suggesting California suffers from a high poverty rate and skyrocketing living costs, Agresti remarked that the state remains one of the nation’s highest-taxed areas, making it increasingly expensive for residents.

Inquiries have been made to Newsom’s office regarding these assertions.