”Survey says” explores various rankings and scorecards that evaluate geographic locations, keeping in mind that these assessments are a blend of interpretation and data.
Buzz: California is experiencing a rapid decline in tax collections, with only one state surpassing the amount of taxes lost by the Golden State.
Source: I examined the second-quarter tax collection data from state and local governments provided by the Census Bureau. This data tracks taxes paid by individuals and companies, including income, property, and sales taxes. It serves as an indicator of a state’s economic health, influenced by factors such as job fluctuations and population growth, and reflects the diverse taxation policies across states.
Topline
In the second quarter, California collected $58.5 billion in taxes, accounting for 15% of the $401 billion collected nationwide. This is the highest tax intake among all states. New York followed with $31 billion, Texas with $25 billion, and New Jersey, Illinois, and Florida with $19 billion and $17 billion, respectively.
However, California’s tax revenues declined by $30.5 billion in one year. How significant is this decrease?
Only New York experienced a larger decline in taxes than California. The loss is greater than the combined tax collections of 16 states.
-
- AFFORDABILITY: Who can afford to live here? What’s being done? CLICK HERE!
Alternatively, during a challenging period for tax collectors in many states, California’s one-year tax loss accounts for 46% of the $66 billion decline nationwide.
It is worth mentioning that this decline follows the record-breaking tax collection of $89 billion in California during the second quarter of 2022. The highest tax collection for any other state was $39 billion in New York during the first quarter of 2022.
Details
After California, the state with the highest tax decline was New York, down $7 billion in one year. Massachusetts followed with a $6 billion decrease, then Oregon with a $1.8 billion decline, and New Jersey with a $1.6 billion decrease.
However, 10 states experienced an increase in tax collections over the past year, with Texas, California’s arch-rival, leading the way with a $656 million rise. Florida, another formidable competitor for California, ranked 11th with a mere $34 million dip in taxes.
Even considering California’s economic strength, its tax loss appears substantial in terms of percentage, with a 34% decrease over the past year. Only in the second quarter of 2020, when the economy was locked down due to the pandemic, did California experience a larger percentage dip in taxes this century.
Additionally, this year’s decrease is more than double the 14% decline seen nationwide. Only two states had worse percentage-wise declines: Alaska, with a 58% decrease, and Massachusetts, with a 43% decrease.
On the other hand, New Hampshire recorded the largest percentage gain at 43%. Texas, California’s rival, ranked fifth with a 3% increase, while Florida was 11th with a 0.1% decrease.
Are you looking for a silver lining? California’s tax collections increased by 10% in the first quarter of 2023.
However, this increase ranked 38th among all states, trailing the national growth rate of 16%. (Note: Texas ranked 31st with a 20% increase, and Florida ranked 39th with a 9% increase.)
Bottom line
The anticipated economic slowdown is impacting government revenues across the country.
In California, population challenges result in a decreased number of taxpayers as the business climate slows down.
Furthermore, California’s tax structure heavily relies on income taxes, which are influenced by stock market gains made by the state’s wealthier residents. Most stock prices remain below the all-time highs of early 2022.
-
- ECONOMIC NEWS: What’s the major trend? Should I be concerned? CLICK HERE!
To be fair, California’s tax collections may be delayed due to taxpayers being given an extended deadline until October 16 to file their income taxes, allowing for additional time following the winter storms.
Regardless of the reasons behind the decline – and the related policy debates – this year’s decrease in tax receipts will necessitate budget constraints for California’s state and local governments. This restraint will burden the entire state economy.
For instance, state and local governments employ 13% of the workforce and contribute 9% to the overall business output in California.
Post script
Even after the decline in collections, let’s compare California’s taxes to its population.
In the year ending in June, the state collected $5,680 per resident, which is 18% higher than the national average of $4,800 and ranks 10th highest among all states.
The District of Columbia has the highest per capita tax collection at $14,760, followed by North Dakota at $8,230 and Hawaii at $7,070. On the lower end, New Hampshire recorded $2,430 and Florida recorded $2,800. Texas ranked fifth at $2,920.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
-
- REAL ESTATE NEWSLETTER: Get our free ‘Home Stretch’ by email. SUBSCRIBE HERE!
Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
