The Pacific Research
Institute reported April 15 that only three other states have an overall tax
burden higher than California's. The report, "Taxifornia: California's tax system, comparisons with other
states, and the path to reform in the Golden State,"
studied the tax burden, the tax structure, and the overall impact of taxes in
the state.
The report by Robert
P. Murphy and Jason Clemens stated: "When we impose taxes on certain
things, we basically tend to get less of those things. Taxes influence
decisions concerning work effort, savings, investment, entrepreneurship, risk
taking, and job creation. These are all things California needs. Additional
work, greater investing by individuals and businesses, and more
entrepreneurship are the foundations for a prosperous society. Understanding
how tax rates, and in particular marginal tax rates, influence these activities is critical in understanding the challenges
facing California."
The first measure
used by the study is the total burden of government imposed in a state – the
extent to which state and local governments extract resources from the economy.
To calculate the burden of government, PRI computed state and local government
spending as a share of the state economy (Gross State Product) for the most
recent year for which all relevant data are available (2007).
South Dakota was the
top-ranked state in this category, meaning it had the lowest burden of
government, with state and local spending representing 11.6 percent of its
state economy in 2007. California ranked 47th (18.3 percent).
California ranked
dead last (50th) for personal income tax. "If policy makers want to
understand why the Golden State's economy is lagging behind those of other
states, the punitive and steeply progressive personal income tax is a good
place to start looking," the report stated.
Cal-TaxReports, April 19, 2010
© 2010 California Taxpayers'
Association.
All Rights Reserved.