I’m From California…

…. And I’m here to help.  Which is true.  I am from California – born in San Francisco – and I do want to help business owners and their businesses succeed.  But that’s not what I’m talking about in the next two sections. 

Let’s start with CalSavers.

• What is this “CalSavers”? Well, as with anything that begins with “Cal”, it is a program mandated (there’s that ‘M’ word again) by the state of California, that is intended to help residents of California with their retirement.

• The thought popped into Kevin De Leon’s head in 2008, which is fairly remarkable, but I digress.

  • The idea was to make up for the lack of retirement savings (the median retirement savings balance for the US resident over 60 is $172,000) that each worker has and a not so subtle admission that social security, while being social, isn’t security and isn’t enough to retire and stay in California. But that was never really the intent of the OASDI program.

    • Old Age, Survivors and Disability Insurance - OASDI - is the official name of Social Security

  • So California feels the need to step in.

  • While businesses with 50 or more employees must already be participating, businesses with 5 or more employees have until June of this year to register with the state.

• Now here is the good news – really:

  • There is no cost to the employer and the employee picks how they want the funds invested.

  • The employee account is set up as a Roth IRA – that’s good.

  • The account follows the employee from job to job – no more rollovers – also good.

• Overall, this is a huge benefit to employees, with an automatic “opt-in” option that saves 5% of their pay. You just have to get them to opt-in.

• The problem with all of these helpful programs that the state puts in place is that the business owner has to keep track of them. Invariably, there is always a fine for missing a deadline, a form, or a comma.

  • That’s how payroll companies started; it became too difficult for the business owner to stay up to date with rules and regulations.

On to CalCares

• As a follow-up to its excellent handling of the unemployment claims and payouts to folks of dubious character living in state-provided housing in San Quentin, the state wants to start its own healthcare program.

  • Just to be clear, this is not in addition to Medicare, it is a replacement for Medicare.

  • It will be paid for by:

    • 2.3% gross receipts tax on business revenues over $2 million. So if your sales are over $2 million and your profit margin is 5%, it will turn into 2.7%. What if you are a non-profit? And what if you are not turning a profit?

    • 1.25% increase in the payroll tax for businesses with over 50 employees.

    • Your workers making more than $49,900 would also pay an additional 1%. But wait, If I make $50,000, I don’t pay a dime for Covered California. Why would I want to start paying now?

  • There are other taxes for folks earning $150,000 or more, but you get the picture.

  • Keep in mind, you could still be paying taxes for Medicare benefits that you will never receive unless the Feds decide to give the Medicare money to California which the current administration will probably do.

• Most folks do not feel there is much chance of this passing since Governor Newsome stated he would not sign that particular proposal. Well, at least for now; evidently he hasn’t had another dinner at the French Laundry with the right person yet.

  • And both the State Assembly and the State Senate have super-majorities to pass this.

• As owners and professionals in California (the out-of-state recipients of this Report don’t have to worry about this), you really need to tell your state representatives what your thoughts are. I don’t care if you are for something or against something, but you need to let them know that you are paying attention. And to tell them what you support and don’t support.

• To do this, just go to this link: https://findyourrep.legislature.ca.gov/ 

Trivia News of the Week

• “I Know Why the Caged Bird Sings” is a book that was required reading in my high school in 1979. Now the author, Maya Angelou, will be on the new edition of U.S. currency quarters issued just this past week. Other accomplished Americans on the new issue of coins include:

  • Sally Ride – Astronaut

  • Wilma Mankiller – Cherokee Nation Chief

    • By far, the most intimidating name on US currency – she can be on any denomination as far as I’m concerned.

  • Anna May Wong – Film Star

  • Nina Otero-Warren – Suffrage Leader and former New Mexico Superintendent of Schools

• For those of you counting, that makes 118 different quarters in circulation, including the original. If you are a numismatic, it’s something else to add to your collection. If you are a tourist, it must drive you nuts. 

Just the Facts, Misc.

• Covid and Jobs – four states have fully recovered jobs lost from the pandemic. They are Texas, Arizona, Idaho and Utah. It’s slowly coming back, folks.

  • As an FYI, Phoenix is one of the hottest – pun intended – housing markets in the United States. But where will they get their water? 

It looks like it’s going to be a nice week in southern California, so no more 80 mph gusts in Santa Clarita and Rancho Cucamonga.  And maybe my internet will be up by next week.