The report highlights a number of adjustments to California's tax code that would lessen the instability of its revenue, pointing out the policy trade-offs that would result from rebalancing the mix of taxes away from the personal income tax, or otherwise changing its rate or structure. The analysis recommends that the state implement a budgetary reserve to help counteract the effects of the volatility.
Revenue Roller Coaster
A report issued in January from California's legislative analyst confirms Governing's assessment of the state's tax system: It's volatile [Government Performance Project, February 2002].
A report issued in January from California's legislative analyst confirms Governing's assessment of the state's tax system: It's volatile [Government Performance Project, February 2002]. Looking at revenues over the past 24 years, the report shows how much of the increase in volatility since 1990 has been due to the wildly fluctuating revenues from the personal income tax, particularly that collected on stock options and capital gains. Economic cycles and the state's tax structure both contribute to the large swings.
The report highlights a number of adjustments to California's tax code that would lessen the instability of its revenue, pointing out the policy trade-offs that would result from rebalancing the mix of taxes away from the personal income tax, or otherwise changing its rate or structure. The analysis recommends that the state implement a budgetary reserve to help counteract the effects of the volatility.
The report highlights a number of adjustments to California's tax code that would lessen the instability of its revenue, pointing out the policy trade-offs that would result from rebalancing the mix of taxes away from the personal income tax, or otherwise changing its rate or structure. The analysis recommends that the state implement a budgetary reserve to help counteract the effects of the volatility.
