A new brief from the California Budget Project — released in advance of Tax Day — reports that California’s lowest-income households on average pay a greater share of their income in state and local taxes than other households. This is even after accounting for the temporary tax increases of Proposition 30 — approved in 2012 — which largely targeted very-high-income Californians.
Using data provided by the Institute on Taxation and Economic Policy (ITEP), Who Pays Taxes in California? shows that nonelderly households in the state’s bottom fifth in terms of income, who earn $13,000 a year on average, pay 10.6 percent of their incomes in state and local taxes. This is a larger share than all other segments of households — including the very wealthy. The top 1 percent of Californians, with an average annual income of $1.6 million, pay just 8.8 percent of their incomes in state and local taxes — or nearly two full percentage points less than the state’s poorest families.
Who Pays Taxes in California? examines how different components of California’s tax system — such as property taxes, sales taxes, and the personal income tax — affect lower- and higher-income Californians. The brief also suggests options for making California’s tax system fairer and promoting economic security for low-income families.
And also: if you’re looking for a comprehensive overview of California’s tax system, be sure to check out the CBP’s Principles and Policy: A Guide to California’s Tax System.
— Steven Bliss