A new Budget Center report released yesterday — in advance of Tax Day — shows that the lowest-income families in the state pay a greater share of their incomes in state and local taxes, on average, than other families, including those at the very top of the income ladder. Who Pays Taxes in California? underscores that this is true even with Proposition 30’s temporary tax increases, which were largely targeted to the state’s wealthiest residents.
This new report highlights data from the Institute on Taxation and Economic Policy (ITEP) illustrating that, on average, families in the lowest fifth of California’s income distribution (with an average annual income of $13,900) pay a larger share of their incomes in state and local taxes than do other families, including the wealthiest 1 percent of families (with an average annual income of $2.0 million).
The report points to specific ways that state policymakers could create a fairer tax system while also fostering greater economic security for California’s low-income families, such as creating a state Earned Income Tax Credit (EITC) and better targeting existing tax credits to low-income households.
— William Chen