Dan Walters at Calmatters.org is back on the economic case with a piece titled "California is leaking vital high-income taxpayers". Before we go to his big picture, Calmatters also just reported the month-to-month changes:
For the second month in a row, the Golden State’s tax revenues fell short of projections: The state in July collected about $1.28 billion less than expected, largely due to lower proceeds from the personal income tax, according to a Monday report from the state Department of Finance. California in June collected about $2.4 billion less than expected.
That $97 billion dollar surplus burning a hole in Sacramento pockets could evaporate pretty quickly. Here's some snippets from Walters' piece
Since 2010, 7.5 million people have left California while 5.9 million people have come from other states. That gives rise to a question: Who is leaving California and why? The Chronicle found that 39,000 San Franciscans who had filed federal tax returns for 2018 had moved out of the city before filing 2019 returns. Collectively, they took $10.6 billion in income with them while people who moved to the city during that period reported just $3.8 billion in income.
California’s top income tax rate, 13.3% on taxable incomes over $1 million, is by far the nation’s highest and when added to the top federal rate of 37% pushes the overall bite to more than 50%. Moreover, a tax overhaul during the Donald Trump presidency basically ended the ability to deduct state income taxes on federal returns.
If anything, California’s taxes on the wealthy are likely to increase. Proposition 30, a measure on the November ballot, would boost the top marginal rate to over 15%, raising money for programs to battle climate change, and another tax hike is headed for the 2024 ballot. Income taxes account for three-quarters of California’s general fund revenues and the top 1% of California taxpayers generate nearly half of those taxes. That’s just 150,000 taxpayers in a state of 40 million, so even a trickle of departures has a potentially huge impact on the budget.
Half of three-quarters is 37.5%. Just saying. The annual change in population has been trending down for 12 years, but we still need to destroy single-family residential zoning via SB9 to build more. We are "leaking" vital taxpayers--nice phrasing from Dan. And we are going to push more through the "leak" to fund climate change even after the Feds have just approved trillions for climate change. All good. Nothing to see here. And in another slick Federal tax move, we are going to give the IRS $80 billion, but they still need to figure out what they will do with it. Probably should have done that first.
I just got the August Dept of Finance report from the state (yes, geeks, you can have it emailed to you). Here's some more color on the July shortfall:
Personal income tax cash receipts to the General Fund for July were $1.057 billion below the month’s forecast
of $7.858 billion. July is not a significant month for personal income tax cash receipts, except for withholding,
which is significant every month. Notably, withholding receipts fell $731 million short of projections in July, or
10.1 percent. This follows a $437 million, or 5.8 percent, shortfall in withholding in June.
That's a 13.9% shortfall.
Posted by: Joe | August 25, 2022 at 05:59 PM