A while back, we blogged on the impact of the change in personal income tax rates included as part of the tax changes in the recent budget agreement. Our colleagues at the Institute on Taxation and Economic Policy have modeled the impact of the full tax package on Californians at various income levels. The verdict? The lowest-income Californians will pay the largest share of their incomes toward the tax increase, while the wealthiest will pay the least.
Moreover, the disparity between the impact on the lowest- and highest-income Californians is even wider than that for California’s state and local taxes as a whole, with the poorest fifth of the state’s taxpayers paying more than twice as large a share of their income for the added taxes as the wealthiest 1 percent.
And again, it is worth noting that not everyone will pay higher taxes as a result of the recent budget agreement. The budget included three temporary and one permanent, and very large, tax cuts that will complicate future years’ budgets by cutting state revenues by more than $1.5 billion per year at full implementation. But more on that later.
– Jean Ross