Insights on L.A. – CA’s Tax System – What’s Next?

Big Picture
The current state budget of CA is $203B, comprised of the general fund ($133B), special funds ($63.4B) and bond funds ($6.04B).
Seventy-five percent of the budget goes to “local assistance” programs that include schools (39% of GF goes to K-12), community colleges, CalWORKS families, Medi-Cal doctors, child care providers, and others. 
To help pay for these programs, almost 17 million Californians send, in the form of a personal income tax, a portion of their annual earnings to the state. These taxes account for nearly 70% of the state’s General Fund revenue. This is an increase from just over 40% in 2010 due to the passage of Proposition 30 in 2012 that raised income tax rates for the highest earners (and Proposition 55 in 2016 that extended the tax increase to 2030).
A growing share of this revenue, 66.6% in 2016, was generated by the top 5% of CA’s tax paying population, and by 2018, 40% was generated by the top .5%. The budget chart above reflects this revenue growth, but more importantly, it highlights state government’s increasing role in funding the needs of a population of almost 40 million residents. 

 

 

 
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