Another tax season is behind us, and once again, my clients are left wondering how California’s burden grew even heavier. During my fifty years in the accounting profession, I’ve seen the California maximum individual income tax rate increase from 11% to 13.3%, the corporate income tax rate increase from 4% to 8.84%, and the base minimum sales tax rate increase from 6% to 7.25%.
I’ve spent my career helping small & mid-sized business owners and individuals in California make sense of and manage their taxes. But the job has changed. It’s no longer about good accounting and straightforward planning. It’s about decoding an ever-growing mountain of regulations that seem designed more to justify their own existence than to help Californians. The people paying the price aren’t corporations with armies of lawyers. They are everyday California workers and small & mid-sized business owners.
Understandably, rules matter. Smart, predictable guardrails protect consumers, build trust in markets, and give businesses certainty to invest and grow. But that’s not what I’ve seen in California. Instead, it’s regulatory sprawl: layers of well-intentioned requirements that contradict each other, shift yearly, and ultimately hurt the very people they claim to protect.
Every year, Sacramento adds mandates and compliance burdens that have forced my clients, the businesses that anchor our communities and create local jobs. to spend more time and money just to keep up. California’s tax code doesn’t always align with the federal tax code, forcing businesses to follow two separate sets of rules. The result is confusion, costly errors, and a system that is impossible to navigate without professional help many can barely afford. Unsurprisingly, these costs are often passed to consumers as higher prices on the goods and services California families depend on daily.
The high taxes and volume of regulations in California are burdensome, but they are not what concern me most. It’s the overreach — and the ripple effects that follow.
As an example, proposals like the California Law Revision Commission’s (CLRC) new antitrust recommendations and the COMPETE Act would empower the California Attorney General to evaluate regional competitive dynamics when deciding whether to block a merger or acquisition on antitrust grounds. They would also open the door to private lawsuits, layering more legal exposure and costs onto businesses simply trying to grow or transition ownership. That’s not consumer protection. That’s government overreach: potential cost increases with a lawsuit attached.
For my clients, small & mid-sized business mergers and acquisitions have been a common path to growth, retirement, or survival. Imagine you’ve spent twenty years building a plumbing company, you’re ready to retire, and a local competitor wants to buy your business and expand. Under these proposals, that deal could be delayed or killed because the Attorney General — or a private plaintiff — decided the competitive landscape in your zip code didn’t look right. This would lead to fewer small & mid-sized business exit potentials for owners, less community investment, and potentially fewer jobs. I’m just not seeing a win here.
The California Policy Lab’s recent research on outmigration documents what many of my clients have seen firsthand: Californians are leaving because the state has become unaffordable and, in many instances, a regulatory hornets nest of complexity. Housing, taxes, and the cost of running a business are driving residents and employers to other states. Regional antitrust proposals that increase legal risk and compliance costs will compound that unaffordability. Every new layer of regulatory exposure makes it harder for a small or mid-sized business owner to stay, harder for a worker to find opportunity, and more difficult for a family to afford the goods and services they depend on.
California’s position as a global leader in innovation, technology, agriculture, and culture isn’t guaranteed and is slowly slipping away. Our next era of growth won’t come from more rules. It will come from smarter ones — practical policies that actually protect consumers, support job creation, and give every Californian a fair shot at building a better life. That starts with demanding better from our elected men and women who write the rules.
Bio: John Bessolo specializes in the taxation of small & mid-sized privately held businesses and their owners, financial planning, and estate planning. He spent the first several years of his career with the Los Angeles office of Price Waterhouse, where he became a CPA. From 1985-1993 he worked for Ernst & Young where he was a member of the Entrepreneurial Services Group and a co-director of the Personal Financial Counseling Specialty Group for the Los Angeles area offices. Prior to founding Bessolo & Haworth, LLP, he spent 15 years as a partner at a Los Angeles based CPA firm of approximately 120 people. Bessolo & Haworth, LLP merged with Eide Bailly, LLP, a national CPA firm, in 2023. Mr. Bessolo retired from Eide Bailly in 2025. He now serves on a number of Boards in the not-for-profit sector.
Written in partnership with Tom White
