SACRAMENTO — A new report by the California Budget & Policy Center shows that how California policymakers choose to raise and allocate resources — taxes and ongoing revenue — contributes to the economic inequities for Californians of color and low-income households while providing many more advantages to wealthy individuals. In a 5 Facts report — Promoting Racial Equity Through California’s Tax and Revenue Policies — the Budget Center outlines how a legacy of racist state and federal policies and practices, along with aspects of the tax code, block people of color from opportunities to build income and wealth.
Taxes and revenue represent our shared effort to support vital public services and systems all Californians need that underpin a robust economy and strong communities. The Budget Center works to highlight the importance of having a tax system that not only provides a strong safety net but also asks individuals, families, businesses, and other organizations to contribute based on their economic ability.
Legacies of historical racist policies and ongoing discrimination in areas such as education, employment, and housing have barred many Californians of color from economic opportunities. As a result, Californians of color — particularly Black, Latinx, and American Indian Californians — are less likely to have high incomes and to have built enough wealth to be able to weather periods of income loss, retire comfortably, and pass on wealth to their children. These barriers have also made Californians of color more likely to have experienced health and economic consequences of the COVID-19 crisis. One area policymakers should consider in efforts to address these inequities is the state’s tax and revenue policies. Although these policies may appear race-neutral, they can play a significant role in either worsening existing racial and ethnic income and wealth disparities or promoting greater equity for Californians.
SACRAMENTO — A new report by the California Budget & Policy Center — Why Aren’t Corporations Paying Their Fair Share of Taxes? — finds corporations are paying less than half the amount in state taxes, as a share of their income, than they did just four decades ago. This is largely due to state policymakers’ decisions to cut tax rates and expand tax breaks for corporations.
California’s corporate taxes raise revenue that helps pay for the public services and infrastructure that enable businesses to exist and to profit in local communities and statewide. Corporations depend on high-quality schools to produce a dedicated and educated workforce and to help attract qualified employees. Corporations, like individuals, also benefit from a range of public services such as those provided by fire departments and the state judicial system that protect corporations’ legal rights. Yet, profitable corporations are contributing less in taxes that support these public services, as a share of their California income, than a generation ago.
Undocumented Californians and mixed status families have been excluded from thousands of dollars in federal aid and most other supports during the worst recession in generations.