![]() Let’s take a deeper look at California’s tax structure, examine the tradeoffs we live with as a result and explore what changes might be afoot. Yet few have been willing to initiate change. Politicians like to talk about the problem, explaining how Proposition 13, the famous 1978 measure that limited property taxes, has created unequal tax burdens. The overall tax structure hasn’t been updated, leaving parts of the economy taxed at some of the nation’s highest rates while other sectors, such as services-which many other states do tax-aren’t taxed in California. Past bipartisan efforts to reduce volatility without raising taxes on the poor and working class have had limited success. Jerry Brown has warned, state and local governments are more vulnerable than ever to teacher and police layoffs, park and library closures and cuts in health and welfare services for the poor. With an “inevitable recession lurking in our future,” Gov. School districts handed out 30,000 pink slips to teachers, and the state was so cash-strapped it gave out IOUs when it couldn’t pay some of its bills.Ĭalifornia is now enjoying one of the longest economic expansions in state history, but the good times can’t last forever. ![]() During the Great Recession, the capital-gains taxes that sustained the state in good times plummeted. ![]() While it delivers big returns from the rich whenever Wall Street goes on a bull run, it forces state and local governments to cut services, raise taxes or borrow money in a downturn. California’s tax system, which relies heavily on the wealthy for state income, is prone to boom-and-bust cycles. ![]()
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