California tax collections tumble $30 billion in a year – Press Enterprise

”Survey says” looks at various rankings and scorecards judging geographic locations while noting these grades are best seen as a mix of artful interpretation and data.

Buzz: California tax collections are falling so fast that only one state took in more taxes than the Golden State lost.

Source:  My trusty spreadsheet reviewed the Census Bureau’s second-quarter tally of tax colletions by state and local government. This yardstick tracks taxes paid by individuals and companies – levies on income, property, sales, etc. It’s both an indicator of statewide economic health – job swings and population growth are big factors – as well as a reflection of varied taxation policies by state.

Topline

California collected $58.5 billion in the second quarter. That’s 15% of $401 billion taken in by states nationally and the largest intake among the states. Next came New York at $31 billion, Texas at $25 billion, and New Jersey and Illinois at $19 billion, and Florida at $17 billion.

Newspaper Ads Canyon Crest CA

But California’s receipts were down $30.5 billion in a year. Now big is that tumble?

Only New York collected more taxes than California’s drop. The loss is larger than the combined tax collections of 16 states.

• • AFFORDABILITY: Who can afford to live here? What’s being done? CLICK HERE!

Or, during a rough period for tax collectors in many states, California’s one-year tax loss equaled 46% of the $66 billion decline nationwide.

Let’s note this is a drop from a record $89 billion collected in California in 2022’s second quarter. The high for any other state is $39 billion collected in New York in 2022’s first quarter.

Details

The biggest tax loser after California was New York, down $7 billion in a year. Then came Massachusetts, off $6 billion, Oregon, off $1.8 billion, and New Jersey, off $1.6 billion.

Now, 10 states increased collections in the past year, topped by California’s arch-rival Texas, up $656 million. California’s other big nemesis, Florida, ranked 11th-best with a mere tax dip of $34 million.

Even accounting for California’s economic heft, its tax loss still looks huge on a percentage scale – off 34% in the past year. Only 2020’s second quarter – when the pandemic locked down the economy – had a bigger California percentage dip this century.

Also, this year’s drop was more than double the 14% decline nationally. And only two states fared worse, percentage-wise: Alaska, off 58%, and Massachusetts, off 43%.

By the way, the biggest percentage gain was New Hampshire at 43%. Rival Texas was No. 5, up 3%, and Florida was No. 11, off 0.1%.

Do you want the sliver lining? California collections rose 10% from 2023’s first quarter.

Yet that gain ranked No. 38 among the states and trailed 16% national gains. (Note: Texas was No. 31, up 20%, and Florida was No. 39, up 9%.)

Bottom line

The much anticipated economic cooling is hitting government coffers across much of the nation.

In California,  the state’s population challenges that trim the number of taxpayers as the business climate slows.

Plus, California’s taxing structure is heavily tied to income taxes – and those collections can be influenced by stock market winnings made by the state’s wealthiest residents. Most stock privces remain below early 2022’s all-time highs.

• • ECONOMIC NEWS: What’s the big trend? Should I be worried? CLICK HERE!

No matter the reasons behind the drop – and the related policy debates – this year’s diminished tax receipts will force California state and local government to pinch pennies. That cost-restraint will be a burden for the entire state economy.

For example, state and local governments employ 13% of all workers and account for 9% of statewide business output.

Post script

Even after the collections dip, look at California taxes compared to its population.

The state took in $5,680 per resident in the year ended in June – that’s 18% above $4,800 collected nationally and 10th highest among the states.

Tops? The District of Columbia at $14,760 per capita, then North Dakota at $8,230, and Hawaii at $7,070. Lows? New Hampshire at $2,430, then Florida at $2,800. Texas was No. 5 at $2,920.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

• • REAL ESTATE NEWSLETTER: Get our free ‘Home Stretch’ by email. SUBSCRIBE HERE!