California has the Tenth Highest Tax Burden in the Nation for 2011

Dec 10, 2013

In Fiscal Year (FY) 2011, California collected $185.2 billion in state and local taxes. While this is an impressive sum of money, it tells us little about whether or not the average California taxpayer can afford this level of taxation.

As shown in the charts below, California’s state and local tax burden (tax collections divided by personal income) was the tenth highest in the nation for FY 2011 at 11.4 percent—or 8.6 percent above the national average of 10.5 percent. Remarkably, despite having a high tax burden it had grown fairly slowly over time by 21 percent to 11.4 percent in FY 2011 from 9.4 percent in FY 1950.

California’s high tax burden is driven by a very high individual income tax burden (3.1 percent, 8th highest) and a high corporate income tax burden (0.59 percent, 5th highest). Of course, California’s high tax burden for these two taxes is driven by high marginal statutory tax rates with the 2013 top individual income tax rate at 13.3 percent (highest in the country) and the top corporate income tax rate at 8.84 percent (11th highest).

Mitigating the high property tax burden has been a declining property tax burden which has fallen by -30.1 percent to 3.3 percent in FY 2011 from 4.7 percent in FY 1950. This drop was driven by the enactment of Proposition 13 passed in 1978. The impact was immediate with a drop in property tax burdens of 52 percent to 2.6 percent in FY 1979 from 5.4 percent in FY 1978.

Proposition 13 implemented (pdf) the following:

  • Capped the property tax rate at 1 percent of the value of property at time of purchase.

  • Capped the increase in property assessments to the rate of inflation or 2 percent—whichever is lower.

  • Rolled back assessment values to 1976 levels.

  • Required state and some local tax increases to be approved by a two-thirds majority.

Some question whether Proposition 13 succeeded in its goal of limiting the growth in tax burdens over time. The Tax Foundation claims that Proposition 13 it just drove up other taxes such as the income and sales tax. Yet, tax burdens are still below what they were in FY 1978—11.4 percent in FY 2011 versus 13.3 percent in FY 1978. So it appears that California’s tax burden would have been much worse today if not for Proposition 13.

Click here to view tax burden data.



Category: Tax Burdens

J. Scott Moody

Scott has nearly 20 years of experience as a public policy economist. He is the author, co-author and editor of over 180 studies and books. His professional experience also includes positions at the American Conservative Union Foundation, Granite Institute, Federalism In Action, Maine Heritage Policy Center, Tax Foundation, and Heritage Foundation.

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