As California Governor Gavin Newsom (D-Calif.) builds his national profile in advance of a 2028 presidential bid, successfully so according to recent polling, he is aided by a state press corps that glosses over some of the less appealing aspects of his record. Take the Sacramento Bee which reported on August 27 that “Gov. Gavin Newsom has opposed all efforts to raise taxes during his tenure.” That statement provides the former San Francisco Mayor and current California Governor with the sort of moderate sheen he’ll need to appeal to a national electorate. The only problem is it’s not true.
Gov. Newsom has opposed all of the wealth tax bills filed during his tenure as governor. However, Newsom has not, as the Sacramento Bee reported, “opposed all efforts to raise taxes during his tenure.” Actually, Gavin Newsom was one of only two governors to impose a tax hike in 2020.
In the summer of 2020,during the height of the state-imposed lockdowns,Governor Newsom and California legislators approved AB 85 which raised taxes on businesses by $9.2 billion over three years by suspending net operating loss deductions and limiting business tax credits to $5 million per year. That tax hike on California employers, which Newsom signed in June of 2020, was made retroactive to the start of the year.
aside from Gavin Newsom, New Jersey Governor Phil Murphy (D) was the other governor to raise taxes on individuals or businesses in 2020. Gov. Murphy and New Jersey legislators raised taxes on both, enacting legislation in September of 2020 that made New Jersey’s 10.75% top marginal income tax rate kick in at $1 million instead of $5 million in annual income.
“This move is ill-advised in normal economic times, but especially in the current crisis,” the Tax Foundation noted at the time about that New Jersey tax hike. “Since taxes on so-called pass-through businesses-S corporations, partnerships, and sole proprietorships-are imposed at the individual level, many small businesses will face a tax increase under the n
Democratic Governors Navigate Tax Cuts as 2028 Presidential Race Looms
Several potential Democratic contenders for the 2028 presidential election are grappling with the issue of tax cuts, a landscape elaborate by their own records and the political realities of their states. While Governor Gavin Newsom of California has positioned himself as an opponent of wealth taxes, his history of tax increases is being contrasted with the actions of other Democratic governors like Andy Beshear of Kentucky and josh Shapiro of Pennsylvania, who have embraced income and corporate tax reductions.
The debate centers on how thes governors balance progressive economic policies with the need to appeal to a broader electorate, notably in swing states. Newsom’s attempts to present moderate credentials are challenged by his opposition to wealth taxes in California,a position that doesn’t align with the actions of Beshear,who signed into law an income tax cut passed by a Republican-controlled legislature in February 2024. According to the Kentucky Lantern, Beshear justified the cut by citing the rising cost of living and the impact of Trump-era tariffs.
This creates a potential vulnerability for Newsom. While he and other potential candidates like Wes Moore of Maryland have criticized the Trump tariffs, Republicans can point to tax increases enacted in California and Maryland as also contributing to higher costs for businesses and consumers – a line of attack they cannot use against beshear. Beshear can uniquely argue he offers the benefits of Republican-led tax cuts without the accompanying tariffs.
Pennsylvania Governor Josh Shapiro is also advocating for tax relief, proposing an acceleration of the corporate tax phasedown initially signed into law by his predecessor. Shapiro’s proposed budget seeks to reduce the corporate tax rate by 0.75% annually, reaching 4.99% by 2029. His office estimates this would result in $10.5 billion in savings for Pennsylvania businesses. This initiative provides Shapiro with a contrasting point to Newsom’s tax increases on businesses during the pandemic, perhaps positioning him as a more competitive general election candidate.
The differing approaches highlight a strategic challenge for potential Democratic candidates. Newsom benefits from a statehouse press corps in Sacramento that has been criticized for downplaying his record on taxes. However, a national campaign would subject him to greater scrutiny, with opponents likely to highlight his tax increases in contrast to the tax-cutting measures enacted by Beshear and Shapiro.
Sources:
https://www.kentuckylantern.com/briefs/democrat-beshear-signs-gops-top-priority-another-income-tax-cut-into-kentucky-law/
https://www.detroitnews.com/story/news/politics/2024/03/13/pursuit-of-southern-foothold-uaw-faces-resistance/73078941007/