The share of California corporate income paid in state taxes declined by more than half during the past three decades. In the early 1980s, corporations that reported profits in California paid more than 9.5% of this income in state corporation taxes. In contrast, corporations paid just 4.2% of their California profits in corporation taxes in 2017, the most recent year for which data are available. California’s state budget would have received $11.2 billion more revenue in 2017 had corporations paid the same share of their income in taxes that year as they did in 1981 – more than the state spends on the University of California, the California State University, and student aid combined. Corporations pay less of their income in taxes today – even amid the COVID-19 economic crisis – than they did in the 1980s in part due to the reduction of tax rates by state policymakers.
The health and economic effects of the COVID-19 crisis are severe – and Californians with low incomes are especially hard hit. Changes to jobs, schools, child care settings, and services are particularly disruptive to the millions of Californians who were locked out of the state's prosperity well before the pandemic hit. How should federal and state policymakers respond to ensure Californians who can least afford economic hardship and health setbacks receive the support they need now?
The Budget Center believes that even in times of crisis, California can lead with strategic and targeted policies that achieve the greatest impact for the children, families, individuals, and workers, especially for those left out of federal relief efforts. We must remember the health of our economy and communities is only as strong as the support we extend to every Californian.
See our recent analyses to learn more about what the COVID-19 federal relief package approved in March 2020 means for California and to understand who is left out from receiving financial and health support.
Californians working in low-paying industries were more likely to lose their jobs since the COVID-19 economic crisis began. Low-paying industries saw a 26.8% decline in jobs from February to April, a loss of over 1.5 million private-sector jobs. This accounts for roughly 62% of private-sector jobs lost.
The federal COVID-19 response efforts include measures to help college students weather this crisis. For example, California students will receive at least $854 million in emergency aid for expenses related to disruptions to pursuing their education, such as housing, food, and child care costs.
Governor Newsom’s revised 2020-21 budget plan is out and now state leaders will make policy choices and fiscal decisions that affect every Californian. But many of those policy decisions have the greatest effect on people who have lost their jobs, incomes, and face a higher risk of exposure to COVID-19. Our team is out with a new video on how state policymakers can move California forward even in the face of an alarming budget shortfall. We share why our leaders must do everything possible – from pushing for more federal relief to using state reserves, from borrowing appropriately to raising additional revenue – not only for our 2020-21 budget agreement but to build an economy that is inclusive of all Californians.
The California Budget & Policy Center, a nonpartisan, data-driven organization with a focus on evaluating public policies and their effect on Californians with low and middle incomes, released the following statement from Executive Director Chris Hoene following the release of Governor Newsom’s revised 2020-21 state budget.