California Democrats propose the state's largest tax increase in history

California lawmakers have submitted a budget to Governor Gavin Newsom that includes two major tax hikes, described by the California Taxpayers Association as the largest in state history. The first imposes a levy of up to $400 per year on private health‑insurance premiums, aligning them with the rates already applied to public Medi‑Cal coverage. The second treats software purchases as ordinary retail sales, a move projected to generate $2 billion to $3 billion annually, though the association warns the actual revenue could be up to five times higher due to the volume of unreported transactions. Combined, the measures could raise as much as $14.25 billion.

Democratic leaders argue the increases are needed to fund the state budget without cutting programs, while critics contend the taxes could burden consumers and businesses and hurt California’s economy. Governor Newsom is expected to sign the package, despite opposition that frames the taxes as a response to federal funding decisions and broader political disputes.