California Tax Revenues Increase by 6.5% in 1Q15

The U.S. Census Bureau released figures for first quarter state and local tax collections by state and type of tax. At $213.8 billion, total state tax revenues collected across all fifty states (excluding Washington, DC) were up by 3.4% in the first quarter of 2015 compared with the same period in 2014 – a reflection of the improving health of the economy. In California, tax revenues were up by 6.5% in the first quarter, an increase of $2.2 billion.

Two of California’s largest tax revenue categories recorded an increase in collections during the first quarter. General sales tax revenues rose by 5.1% to $9.6 billion, coming in slightly below the national increase of 5.4%. Personal income tax revenues were $17.7 billion in the first quarter, an increase of 9.4% over the year. Nationally, personal income taxes were up by just 1.1%. Although personal income tax revenues constitute the largest share of taxes collected in the state of California, personal income tax revenues are extremely volatile, as demonstrated by the chart below, which greatly complicates the budget planning process.

In contrast, California’s corporations paid just $1.8 billion in income taxes during the first quarter, a decline of 2.5% compared with the same period a year ago. Corporate tax payments also tend to be very volatile but they count for a relatively small share of California’s “Big Three” revenue sources. Across the U.S., corporate income taxes were up by 9.9%.

Altogether, sales and personal income taxes made up 67.0% of state revenues nationwide. California relies more heavily on these two revenue sources compared to other states. Sales and personal income taxes regularly contribute over 75% of total tax revenues received in a given quarter.

Source:    http://www.census.gov/govs/www/qtax.html