By Steve Williams
In my last RedState op-ed, I argued that Republicans can’t just cut taxes and walk away. We must prove we can govern — and in California, that means pushing tax reforms that create opportunity, unleash investment, and ease the burden on families, workers, and entrepreneurs. The problem isn’t just high taxes; it’s a tax code that actively discourages growth.
READ MORE: Tax Cuts Delivered — Now Republicans Must Prove They Can Govern
Not long ago, I reached out to a well-known Southern California chef — someone with national recognition and deep roots in the local dining scene — about helping him find new locations. His response was blunt: “I’m done opening restaurants in California until they fix things.” That one sentence captures what so many Californians feel. It’s not just policy on paper driving people away — it’s real-world frustration from those who want to build, hire, and invest here, but can’t justify it. We’re living in a state where gas, groceries, income, and even ambition are taxed. What we’re feeling isn’t frustration. It’s economic exhaustion.
On April 1st, L.A. County’s sales tax climbed to 9.75%, with cities like Palmdale and Lancaster hitting a staggering 11.25%. As of July 1st, California’s gas tax rose again — now topping $0.61 per gallon in excise tax, not including hidden compliance costs from the Low Carbon Fuel Standard. These hikes promise solutions for homelessness and infrastructure, but on the ground, few can point to actual results.
Meanwhile, California holds the highest state income tax in the nation, topping out at 13.3%. Proposals continue to circulate for taxing unrealized gains, so-called "excess profits," and even imposing exit taxes on those who choose to leave the state. It doesn’t just disincentivize success. It punishes it.
Other states are moving in the opposite direction. A recent Americans for Tax Reform (ATR) report showed that 15 states cut income taxes in 2024 alone. Indiana dropped its flat tax to 2.95%, aiming even lower. Iowa consolidated brackets into a flat 3.9%. North Carolina is heading to 3.99%. West Virginia shaved nearly 2% off its top rate.
These are serious reforms — grounded in strategy, not gimmicks. Meanwhile, California keeps doubling down on complexity and cost.
If we want to make this state competitive again, Republicans must champion a pro-growth, responsible, and family-first tax agenda. That means:
- Flattening income tax brackets
- Introducing automatic tax cut triggers when surpluses appear
- Capping the growth of state spending
- Phasing out income taxes over time
Flat taxes offer predictability and fairness: one rate for everyone, no loopholes, no penalties for working harder. They also reduce compliance costs and make it easier for businesses to expand.
One overlooked but powerful way to stimulate real estate investment is through depreciation reform. Right now, most structural improvements to residential and commercial buildings must be depreciated on a straight-line basis — 27.5 years for residential, 39 years for commercial. That means you invest today but deduct the cost slowly, over decades. In a high-cost, high-risk state like California, that kills momentum.
The 2017 federal tax reform law temporarily expanded Bonus Depreciation, allowing businesses to deduct a large portion of qualified improvement costs in the year they were made. This fueled real estate activity nationwide. But Bonus Depreciation isn’t matched in California’s code. We’re missing the moment.
California should adopt Accelerated Depreciation for structural improvements. This would reduce tax liabilities in the early years of a project, improve cash flow, and drive new investment — without any new subsidies or government spending. For communities starved of investment, that’s a game-changer.
I work with real estate investors who want to invest throughout Southern California, including underserved areas like South Central L.A. But once they see the tax burden and permitting maze, they look elsewhere. CEQA abuses, endless delays, and regulatory contradictions make it difficult to get projects moving. Add the slow-motion depreciation schedule, and even projects that house working families or the formerly homeless don’t pencil out.
We’re also missing the global capital surge. When the U.S. dollar drops in value, foreign investors see American real estate as a bargain. But California’s unfriendly tax environment is leaving billions on the table. CoStar, a global provider of real estate information, analytics, and online marketplaces, recently reported that dealmakers are sitting on historic amounts of capital ready to deploy. But they’re going to Florida and Texas — not California.
Florida, long mocked by coastal elites, is beating California on policy. Just this month, the state repealed its tax on commercial rent, offering immediate relief to tenants and attracting more investment. That’s smart governing.
Meanwhile, Sacramento continues to punish success. From wealth taxes to exit taxes, the message is clear: If you prosper, you pay. But the irony is painful — those taxes push prosperity away.
This isn’t theory. It’s playing out in the real economy. When restaurants close, small businesses fold, or developers stop building, it’s not because they lost interest. It’s because the math no longer works.
If you’re a Republican running for city council, state legislature, or Congress, and you’re not talking about tax reform, you’re not listening. Families are squeezed. Investors are spooked. Builders are stalled. All of it comes back to tax policy.
We know what works. We’ve seen it in other states, and we’ve even seen it federally. Taxpayer-first candidates win. Since ATR launched the Taxpayer Protection Pledge, Republicans who commit to opposing tax hikes have consistently outperformed those who hedge. That applies in California more than ever.
This is a kitchen-table issue:
- Can’t afford a home? Builders are taxed and regulated into paralysis.
- Paychecks don’t stretch? Sacramento takes its cut before you see it.
- Your favorite local spot shut down? Taxes, insurance, and compliance costs drove them out.
We don’t need to reinvent the wheel. We just need to catch up.
California Republicans must lead — because no one else will.
In business, time kills deals. In politics, delay kills opportunity. Let’s lead.
Steve Williams is a seasoned real estate professional, Republican Party leader, and former congressional candidate from Los Angeles County. Follow him on X (formerly Twitter): https://x.com/SteveAWilliamsX
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