For many years, Rich States, Poor States, Tax Myths Debunked and other ALEC publications have warned against over-reliance on state level income taxes – on both personal and business income. The reasons are numerous and range from the adverse economic effects of the taxes, to purely public finance objections, such as the volatile nature of income tax revenues.
Recently, even liberal Governor Jerry Brown joined in the chorus and admitted Sacramento’s over-reliance on income taxes has now caused some serious budget problems for the Golden State. This is more than somewhat ironic, since the governor helped pass the very same income tax hikes that exacerbated the problem. A headline from Tax Notes read “California Governor Says Dependence on Income Tax Hurts Revenue Stability.” The story goes on to report that “California’s tax revenue in April was over $1 billion less than projected, and according to the summary of Brown’s May budget revision, the state is predicting a shortfall of $1.9 billion over what was forecast.” Many on the political Left rejoiced when, in 2012, California increased taxes and retroactively saddled hardworking taxpayers with the highest marginal personal income tax rate in America – a shocking 13.3 percent. California also has the most “progressive” income tax in America according to the 2016 edition of Rich States, Poor States.