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New CA Tax Recommendations Could 'Reduce the Burden on the Wealthy'
A state report on restructure California's tax system is due today and the Associated Press, which obtained an early copy, has found that bold changes are recommended, prompting a large amount of skepticism. The AP explains some:
Since the tax system was established in the 1930s, when farms and factories drove the economy, the state's tax policies have not kept up with the technology and service industries that now dominate. The system also has made the state's finances more volatile. California used to get most of its revenue from the sales tax.
Now personal income tax makes up the majority of money coming in, and that makes California vulnerable to the booms and busts of Wall Street. The shift has led to a series of budget crises since the state now relies heavily on the top 10 percent of income earners, who paid more than 53 percent of the personal income tax last year, according to the report.