A Stable Budget for California

California is attempting to find a way to stabilize tax revenues so the budget becomes more stable (and manageable). Here is what the blue-ribbon panel came up with:

— Flatten the state’s income tax by reducing the number of brackets from six to two and capping the top rate at 6.5 percent. Millionaires would still pay an additional 1 percent on income above $1 million for mental health programs.

— Install a new form of tax on all businesses that applies to their net revenues minus purchases from other firms, dubbed the Business Net Receipts Tax. Companies would not be able to exempt wages and benefits for in-house employees, although they could exempt any payments to contractors. The rate would top out at around 4 percent, less than half of the existing corporate tax.

— Eliminate the 5 percent state sales tax portion that goes toward the general fund.

— Eliminate the state corporate tax.

— Establish a new independent tax forum to resolve tax disputes.

— Ask voters to establish a new rainy-day fund and spending cap.

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12 Responses to “A Stable Budget for California”


  1. 1 Deb Snyder September 30, 2009 at 9:59 AM

    California has been trying to initiate a Flat Tax system for as long as I have been a taxpayer, which is many years now. I have no opinion one way or another if this is a good idea, but it seems that what we have is not working, so why not? It might be worth a try.

    But the real problem is this – California voters keep voting in new and different measures that cost Billions of dollars to pay for. Billions of dollars that California does not have, no matter how we get taxed. Until something is done about how people are voting, and people understand that there is just so much money, no tax structure ever thought of will get us out of this situation.

  2. 2 Cole Norton September 30, 2009 at 7:48 PM

    California’s new plan for income tax is overall a good attempt. After all, California is millions of dollars in debt and has been for some time, yet this new plan should at least create a stepping stone in the right direction. If nothing else, this new plan will at least get people thinking about California’s economic state, and will hopefully open the eyes of people in the state to sincerely try and make a change for the better. Whether or not this plan works depends on both the people and the government of California. The people have to stick with it and not give up on it, and the government has to actually stick to, and provide the plan for people to follow.

  3. 3 Matthew Abang October 1, 2009 at 11:28 AM

    I’m glad the state is trying to lower the income tax. This will really help families save money during the recession. Also, if businesses are taxed too much, then they will not be able to hire people and current employees may have to take pay cuts or lose their jobs all together. The legislature needs to find ways to cut unnecessary spending. The hard part is that with so many people living in California, this means higher budgets for schools and other needed services. This problem is a tough one to be sure. In May, state voters rejected five propositions that would have raised taxes. It is better to keep taxes low so families can save money and use it on things that are essential to them.

  4. 4 Amanda Herrera October 1, 2009 at 2:09 PM

    It is nice to see that California is attempting to fix the problem of taxes in our state but i am not sure this plan will work. However, it is good in a way because it shows that as a state California accepts that taxes are a problem and are taking actions to try and fix them. “Its better than nothing” or “it doesn’t hurt to try” attitudes are the one i am expressing. Ultimately it seems like it is up to the people in California since we live in a democracy.

  5. 5 yvonne October 5, 2009 at 8:40 AM

    I believe an overhaul on taxes here in California is needed. Maybe, this new tax plan will work we shall see. Who we tax and take from is what we all need to take a look at. It’s funny because with the health plan today it’s requiring we provide our own healthcare either through work or pay it out of pocket. Now what about our low income families who are struggling just to keep food on their table or a roof over their heads? Health care is far from those homes. We need to tax where it’s necessary and forget about who we hurt. Is anyone thinking of the poor when they remove programs which help them survive? Do we care about what they feel? Let’s work on a plan that’s going to help all the people not one that is going to help the rich get richer and the poor get poorer.

  6. 6 Halona Hong Truong October 5, 2009 at 9:13 AM

    I agree that it is reasonable for the federal government to provide short term loan guarantees to help California with cash flow issues, as tax revenue is somewhat uneven throughout the year and the traditional credit markets are not up to the task of helping CA even that out currently.

  7. 7 Ruby S. October 5, 2009 at 2:35 PM

    It seems as if California has good ideas on what they want to do in making a difference for not only the people of California, but for the immense debt it is in as well. It’s good to know that California is making some modifications in order to adapt to the current economy.

    However, I have to wonder where the money from these taxes was originally going and what are the consequences of reducing/eliminating them?

  8. 8 Kathryn Koller November 27, 2009 at 5:53 PM

    At least California is trying to figure out a budget… however I’m not sure how much this will get us. I think the best way to save money would be to get rid of propositions. The way they are written is confusing that most of the time it is hard to figure out what would happen if you were to vote no or yes. Props just ask for people to give their money to the not so important situations at the moment. I think by just putting a stop to these the state would be able to save much more money.

  9. 9 Kali Hardcastle December 6, 2009 at 12:06 PM

    so california is raising taxes and cutting spending basically? the only thing wrong with this is that with the increasing of taxes, the price of living is a increasing as well. people will start spending a lot less which wont help local economies. i hope california can come up with a decent budget plan because at the rate that we are going, we are putting ourselves, as a country, further into debt.

  10. 10 Vince Kaehler December 6, 2009 at 3:39 PM

    The bottom line is that California keeps passing new bills and pass other bills to keep the taxes low. California is one of the highest taxed states in the union. However, we have the biggest amount of debt. Other states who are barely taxed are surviving with few problems. This obviously means that either California is spending on unnecessary propositions, or it is not using the money effectively. People need to realize that the gov cannot do everything for everyone.

  11. 11 Taylor Smith December 12, 2009 at 10:09 PM

    California really needs to figure a lot out. Taxing the amount they do and spending the amount they do. where is this money going that the California government is spending? the people are just having to pay for everything the government wants to spend money on and the people do not get anything back just higher tax rates. Many other states are able to maintain their economies with lower taxes and lower debt than California, that does not say anything positive for California.

  12. 12 Brodeick Nickelberry Jr. December 13, 2009 at 3:56 PM

    I don’t think California ever really knows what to do. They just do things the people don’t approve of. such as raising taxes and cutting funds to things like our schools. That is not how they should be handling things.


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