The wealthy in California are currently contributing to the total state income tax, hinting that there should be a state tax reform.
The wealthiest 1% paid around 47% of the total income tax in the state in 2015, according to the Franchise Tax Board. However, those on the lower income scale only gave about 2.2% of the total tax income.
The revenue income has become ‘unreliable’ because the state is too dependant on those who have high incomes. But when a recession occurs, that income falls apart, creating ‘budget deficits.’
Trump and Congress are playing around with the possibility of halting state and local taxes from being deducted on federal 1040s.
However, the state saved taxpayers around $101 billion in 2014 with the deductions on state and local taxes, according to the nonpartisan Tax Foundation.
A way to potentially reform state tax is to extend sales taxes to services instead of relying solely on retail taxes. Also taxing high income earners at a lower rate would act as an ideal reformation.
“I’ve kind of pulled back a little bit, waiting to see what Trump is going to do,” said State Controller Betty T. Yee, who has been a supporter of a tax reform.
See the full story on the LATimes.com.