California has some of the highest taxes in the country, but some people and cities still think it is okay to impose more taxes on people and businesses.
Despite skyrocketing inflation and high taxes in the United States, especially in the state of California, circulators in the city of Anaheim are gathering signatures for a ballot initiative that would impose a 3 percent gross receipts tax on for-profit hospitals.
The potential ballot initiative’s language says that for-profit “general acute care hospitals” that are subject to the tax “could request from the City that the Hospital’s gross receipts be apportioned according to the amount of business activity the Hospital has within Anaheim or the State of California,” according to the Anaheim Observer.
This tax would target hospitals that are “24-hour inpatient care” and include services such as “medical, nursing, surgical, anesthesia, laboratory, radiology, pharmacy” services.
Revenue raised from this tax would go into the city’s general fund, and there appears to be no mention of where the funds will go, which appears to likely just be revenue for Anaheim.
This tax means that hospitals could be taxed on their gross revenue, and they would not be able to deduct the costs of providing services to patients or selling medical supplies. The Tax Foundation has argued that gross receipts taxes end up imposing costs on consumers, workers, and shareholders.
“Prices rise as the tax is shifted onto consumers, impacting those with lower incomes the most,” the study found. In this case, the costs will likely end up being imposed on patients. Some firms may lower wages to accommodate the tax, reducing incomes.
The organization also found that some “firms may lower wages to accommodate the tax,” which ends up reducing incomes. This could potentially reduce incomes of the workers at hospitals and given that inflation is rising, this may be bad news for workers.
The Tax Foundation urges states to consider alternatives to gross receipts taxes given the economic problems they cause, as well as lack of transparency and “complexity in practice.” It instead recommends well-structured “sales taxes” which “can provide reliable revenue with fewer economic costs.”
The Anaheim Observer also noted that it is unsure who is behind the initiative and why it only targets these for-profit hospitals.
In 2021, a study from Health Affairs found that for-profit hospitals provided 65 percent more charity care compared to their non-profit counterparts.
