by David Block, Scott Drenkard
Tax Foundation
August 01, 2012
Governor Jerry Brown signed a new California budget on June 27 that depends on voters to approve $15.7 billion in new taxes in order to meet expected expenditures for fiscal year 2012-2013. The tax increases, which will be sent to California voters in November for their consideration as Proposition 30. The package of tax increases raises the California sales tax rate by 0.25 percent to 7.5 percent for 4 years and raises income taxes on those making above $250,000 for 7 years. The income tax increase is retroactive and would apply to all income earned after January 1, 2012.While Governor Brown contends that the income tax increase is necessary to prevent cuts to popular government services, the historical record shows that California’s budget has grown steadily in recent years. Additionally, the plan’s heavier reliance on high income earners will only further exacerbate California’s troubles with revenue volatility, impacting the state’s ability to fund future government programs.

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