The site will be updated regularly throughout each business day. Preliminary posts use dollar figures from tax administration agencies, while the following day the Controller will post reconciled (actual cash) figures. The latest figures are always available via direct download. Preliminary sales tax figures, along with personal income tax withholdings will be available by 10:30 a.m., followed by total personal income and corporate tax receipts, along with final sales tax numbers between 1:30 and 4:00 p.m. the same business day.
The chart on the right of this screen tracks the cumulative total of income, sales and corporate tax and compares it against estimated benchmarks for the month.
Thursday, May 1, 2014
Wednesday, April 30, 2014
Personal income taxes tracked estimates closely, missing projections by $36 million, or just 0.3%. Retail sales taxes were also close to target receipts, missing estimates by a tiny $8 million, or 1%. In contrast, corporate taxes contributed a positive variance of $170 million, or 11%.
The performance of California's revenues during April puts the year-to-date margin above projections by $1.7 billion. Final numbers released in less than 24 hours will show the exact margin, but a cushion of $1.7 billion is a good sign for California.
Also of note: Compared to Los Angeles, San Francisco's taxed wealth showed a different distribution. In 2011, FTB reported that about 3,000 of San Francisco's 300,000 taxpayers had adjusted gross income exceeding $1 million. Of the $42.7 billion of total AGI reported by SF taxpayers, these “millionaires” had $12.5 billion (29 percent). They were assessed tax of $1.0 billion (41 percent) -— out of the $2.6 billion —- assessed on San Francisco taxpayers.
So when compared to LA County, the SF taxpayers with $1 million AGI represented the same tiny proportion of taxpayers, but they had a greater share of the county’s AGI and tax assessments.
Also of note: Capital gains are not the only "volatile" aspect of the income tax. Withholding payments can vary from year to year and month to month. Just as one example: Looking at withholding payments made in April 2011 through 2013, withholding payments rose from $87.8 million in April 2011 to $125.8 million in the next year and $167.8 million in April 2013.
Tuesday, April 29, 2014
For the total fiscal year, the Governor's budget expects retail sales taxes to total about $22.5 billion. That would amount to about 22% of the total of the three major revenue sources -- sales, corporate, and personal income taxes -- likely to be achieved.
Tomorrow, the last day of the month, is expected to be the largest day for April for retail sales tax receipts as various enterprises remit their payments. Hopefully, some of the refunds tax payers have received will come back through California's cash registers.
Also of note: The FTB processes tax payments as quickly as possible, but not all payments are processed in April. In fact, only about 60 percent of the 2011 tax liability was processed by April 28, 2012. Processing rates vary by the income class. Through April 2012, FTB processed more than 80 percent of the 2011 returns reporting adjusted gross income (AGI) between $1 and $200,000. For returns with AGI between $200,000 and $500,000, it processed about two-thirds of the returns in the same period. The processing rate fell to about one-third for returns reporting AGI of $1 million or more.
April is always the most important month for California's tax coffers. In terms of its three primary revenue sources -- PIT, corporate, and sales taxes -- April typically accounts for about 11.5% of total taxes collected for the fiscal year. If tax payments were distributed equally across the year, the monthly tax take would be only 8.3%.
Last year's tax rate increases from Proposition 30 caused April to account for 15% of total revenues collected for the year. Since tax rates have remained unchanged, that impact will be absent this year. The gains in jobs, incomes, and capital gains from stocks and real estate are still likely to mean that this April will account for nearly 14% of revenues for the total year.
Also of note: Since beginning our daily installments of Tax Tracker this year, we have reported on the income-tax payments processed by FTB in March and April. Not all the processed payments, as reported, are associated with the 2013 tax year. Some of them are payments for 2014. Some of the total may include settlements of prior-year liabilities. And, if this year is like previous years, some of the 2013 tax payments will be processed after this month. For example, FTB processed a little over 83 percent of all the 2011 resident returns by April 28, 2012. FTB processed the rest between the end of April and December 31, 2012.
Monday, April 28, 2014
Although the year-to-date results are still slightly trailing projections made as part of the Governor's Budget presented in January, consumers may be catching up. In the meantime, the corporate and personal income tax segments remain well above their January forecasts.
Also of note: The number of limited liability corporations (LLC) keeps growing. In 2011-12, 80,275 new companies registered with the State. The following year, that number rose to 89,158, which marked a more than 10 percent growth rate. The number of total tax returns rose from 336,289 to 353,104, representing a gain of 5 percent. At the same time, revenues from LLCs grew from $627 million to $658 million, also a 5 percent increase.
Friday, April 25, 2014
Based on the total of all entities in California with payrolls (including government agencies, but not single proprietorships), wages and salaries totaled nearly $210 billion in the second quarter of 2013. For the total year, payrolls probably approached $900 billion.
Last year’s gain in total payroll dollars was probably around 4.8 percent based on the latest available data. This followed the 6.0 percent jump for all of 2012 and was in stark contrast to the 5.4 percent plunge of 2009. This volatility points to the need to be cautious in ramping up spending during times of economic rebound and the need to build the state’s reserve fund.
Thursday, April 24, 2014
The pickup in corporate taxes reflects the economic recovery that has boosted company earnings nationally and in the state. The period of large write-offs from losses incurred during the recession has also ended.
It is good news to see that corporate taxes are no longer stalling.
Over the last five years, retail sales revenues, on average, have experienced a moderate but significant surge in the final days of collection for the month of April.
With the estimated $58.6 million received today, the margin between revenues and the estimate is getting smaller.
The daily income tax collections are likely to taper off until the end of the month. Last year, these final four days generated additional PIT revenue of about half a billion dollars. If this year generates as much, budget watchers can expect that cumulative income tax revenues will total about $53.2 billion by April 30. That is an increase, but a small change -- well within estimating error -- of the January estimates. Is the change enough to warrant an upward adjustment of current- and budget-year revenue estimates?
Wednesday, April 23, 2014
But, the state does not have the luxury of waiting until mid-summer to deposit its tax checks. Thankfully, many taxpayers file tax returns electronically, so the electronic filing facilitates verification of returns and payment processing. FTB also hires many seasonal workers to assist during the peak processing days for those returns filed through the mail. Without the careful planning and professionalism of FTB staff, the python of tax processing would take much, much longer.
Each month, residents from around the West—from Hawaii, Alaska, Montana, Utah, Oregon, Washington and California--mail their quarterly income tax payments to a post office box in San Francisco. Typically, these payments come from high-income taxpayers, including payments from software moguls, oil-rig engineers, Hollywood starlets and prairie rustlers. From the San Francisco PO box, the IRS trucks the letters to Hayward for envelope opening, tax verifying and payment depositing. What if, during the processing of those checks something really, really bad happened? Something did on September 11, 2005: The truck carrying these payments across the San Mateo bridge had a particularly nasty accident. All 30,000 letters fell into the bay. The IRS recovered about half the letters. What happened to the other letters? Like Luca Brasi, 15,000 tax payments sleep with the fishes. The IRS waived interest and penalties for the taxpayers whose returns remain in the bay.
Tuesday, April 22, 2014
Monday, April 21, 2014
Buoyed by a relatively good day for personal income tax receipts (PIT) and continued strength on the corporate side, preliminary numbers for April 21 show that California’s total receipts from its three major revenue sources are still exceeding projections by about $2.7 billion.
Monday’s numbers, including weekend dining and spending for Easter, also indicate that retail sales taxes are catching up, with year-to-date receipts only trailing estimates by around $67 million.
The stock market’s performance remains critical to the revenue outcome. Of the capital gains and losses reported in 2011, taxpayers reported stock gains of $29.0 billion. Against these gains, they netted losses of about $15.2 billion. For stocks held less than a year, they reported more losses than gains, showing losses of $5.5 billion and gains of $4.8 billion. Gains from stocks held longer than a year outstripped losses by $14.5 billion.
California’s personal income grew a moderate 2.8% in calendar year 2013 versus a 5.0% gain in 2012. Personal income growth nationally also slowed from 4.2% to 2.6%.
Two major forces led to some slowing in income growth last year. First, the two percentage point temporary drop in payroll taxes for Social Security (from 6.2% to 4.2%) that was in effect during 2011 and 2012 ended. Second, individuals tried to shift some income, such as bonus payments, into 2012 before higher federal tax rates went into effect in 2013. (California’s increase was retroactive to January 1, 2012).
As a result of these changes, wages and salaries net of Social Security taxes rose just 2.1% last year in California. Investment income -- including dividends, interest, and rent – increased by 4.1%. Various transfer payments -- including Social Security, Medicare, veterans’, and unemployment benefits -- also saw a strong 4.0% gain. Overall, last year, California ranked 16th in national income growth and was in the fourth quintile of state
In addition to growth in the core PIT base, including wages, investment income, and transfer payments, capital gains through the stock and real estate markets are major drivers of PIT. In his May Revision documentation, many expect the Governor to discuss how much taxable capital gains may add to 2013-14 and 2014-15 revenues.
What makes taxes on capital gains difficult to estimate? There are many reasons, but one important reason is that taxpayers often have discretion about when they “realize” a gain for purposes of taxation. They can defer selling a stock, for example, that has appreciated a year or two, as they manage their investment portfolio. For example, of the $74.7 billion in capital gains reported by taxpayers in 2011, $11.1 billion (15 percent) were from investments held for less than a year. The balance, which could include stocks and real estate, were held for an excess of 12 months. The holding period could be a very long time. The State’s revenue estimators have a difficult time estimating how much of these holdings have appreciated and when taxpayers might decide to realize their gains.
When trying to anticipate capital gains, revenue estimators must consider investment losses when trying to predict taxable gains, as losses can reduce tax liabilities on investment gains. For example, taxpayers reported capital losses of $25.7 billion in 2011. These losses were used to offset over one-third of the investment gains reported for the tax year.
Friday, April 18, 2014
As last month's job gain was offset by more people entering the work force, the jobless rate held steady at 8.1% between February and March. This still represents a sizable drop from the 9.2% rate prevailing a year ago.
Job growth has also boosted withholding taxes paid by the state's employers. So far in April through Friday, the 18th, withholding taxes have totaled $2.5 billion.
FTB segregates capital gains into four major categories: stocks, residential real estate, non-residential real estate and all other (including nonstick securities, bonds, partnerships and S corporations). Of the first three categories, stocks showed both the biggest reported gain ($29 billion) and loss ($15 billion) in 2011.
Thursday, April 17, 2014
Hopefully, Californians will spend more before Sunday arrives. Recent surveys by the National Retail Federation (NRF) suggest that American consumers will spend nearly $16 billion on purchases related to the Easter holiday this year. Based on California’s 13% of the nation’s total income, California Easter sales should equal about $2 billion.
Wednesday, April 16, 2014
Today was very strong in terms of California's tax take, according to preliminary figures. April 16 receipts of California's three major revenue engines -- personal income taxes (PIT), corporate income taxes, and retail sales receipts -- reached $3.1 billion. This brings the month-to-date total to $7.3 billion, or 56%, of the total expected for the month.
Today's collection of PIT led the surge, totaling $2.5 billion for the day. This was virtually identical to last year's tax take and appears surprising since a change in tax rates probably boosted last April's figure. Some caution is warranted due to revisions that could take place tonight, but if the numbers stand close to this reading it is good news for California's bottom line.
Also worth noting: Not only individuals and households filed their income tax returns yesterday. Sole proprietorships file under the income tax system as well. In 2011, 2.2 million sole proprietorships filed with FTB, and were assessed $9.8 billion in taxes. Of this tax assessed, service firms account for about $5.8 billion (59 percent). These firms could provide technical, scientific, administrative or health services. Firms specializing in finance, investment and real estate owed $1.4 billion (14 percent), while firms specializing in retail and wholesale trade had assessments of about $600 million (6 percent). FTB assessed another 500,000 firms $1.1 billion (11 percent), but FTB was unable to determine the nature of the sole proprietorship's business.
The tax board notes that the tax gap affects all Californians, saying that when some taxpayers fail "to pay what they owe [then] the rest of us bear an additional burden. This [higher burden] can come in the form of higher fees and taxes, fewer government services, or budget deficits -- or all three."
Yesterday's tax surge put the State's cash tally in terms of its three major revenue sources -- PIT, corporate income, and sales taxes -- at about $67.7 billion for the fiscal year to date (July 1, 2013 through April 15, 2014). This is $1.6 billion more than projected based on the Governor's Budget released in January.
PIT is running about $1.0 billion, or 2.2%, above projections. Corporate tax revenues are more than $700 million, or 16.8%, above expectations. Retail sales are the only category still behind forecasts, although the 0.7% miss amounts to only about $100 million.
Also worth noting: Taxpayers pay a rising tax rate on incremental increases of income. Because of the rising rates, high-income taxpayers will not pay the topmost tax rate on all their income today. Consider for example, the effective tax rate paid in 2011 by the 671,290 taxpayers with adjusted gross incomes above $200,000.(Note: 2011 reflects a tax year prior to the imposition of the Proposition 30 levy.) Of these high-income taxpayers, 334,834 (50 percent) paid at a tax rate between 5.0 percent and 6.9 percent. Another 228,388 (34 percent) paid between 7.0 percent and 8.9 percent. Fewer than 25,000 taxpayers (4 percent) paid at a tax rate exceeding 8.9 percent. At the other end of the scale, 83,549 high-income taxpayers (12 percent) paid a tax rate of between 0.0 percent and 4.9 percent.
Tuesday, April 15, 2014
Consider that in 2011, 15.0 million resident taxpayers filed returns, but 6.5 million (43 percent) had no tax liability. Nearly all of the non-taxable returns were filed by those reporting adjusted gross incomes (AGI) of less than $50,000. Comparing the returns by AGI, the nontaxable returns are predominately among the lower AGI classes.
- Of the 9.5 million returns reporting AGI less than $50,000, 6.1 million (65 percent) had no tax liability.
- Of the 3.1 million returns reporting AGI between $50,000 and $100,000, 300,000 (10 percent) had no tax liability.
- Of the 1.7 million returns reporting AGI between $100,000 and $200,000, less than 11,000 (1 percent) had no tax liability.
- Of the 700,000 returns reporting AGI exceeding $200,000, less than 2,400 (0 percent) had no tax liability.
According to the Franchise Tax Board’s latest annual report, 8.5 million resident taxpayers had a liability in 2011. Of those, 3.8 million (45 percent) had liabilities of up to $1,000, and another 1.3 million (15 percent) paid between $1,000 and $2,000. For 2.0 million (23 percent) other taxpayers, tax liabilities ranged from $2,000 and $6,000. The rest, about 1.4 million (17 percent), had liabilities exceeding $6,000.
With many taxpayers struggling until the end to meet the filing deadline, the heaviest cash flows can be expected tomorrow and Thursday. Last year, reflecting the impact of capital gains, an improving economy, and higher tax rates, April tax receipts peaked on the 16th of the month at $2.7 billion. This number includes withholding taxes filed by companies in addition to estimated and final tax payments but does not reflect the impact of refunds. With tax rates holding steady during the past year, this year's peak for the month is likely to be much less than last year, but it is still expected to be close to or surpass $1.5 billion.
Monday, April 14, 2014
So far this month, personal income tax and sales tax receipts appear to be running somewhat below expectations for April, while corporate taxes are consistently running above projections. A clearer picture will come into view as this week proceeds with the deluge of personal tax filings.
Meanwhile, although sales taxes pale in comparison to California's collection of income taxes, they are still a significant source of revenue and also an important barometer of the overall economy. This morning’s positive report on retail shopping is thus good news.
National retail sales jumped 1.1% between February and March, which was the best performance in 1-1/2 years. Although some of this reflected a weather-related bounce not relevant to our state, the general upswing suggests that consumers are more optimistic about the economy and ready to spend.
Consumers were spending more on items across the board. These included spending for cars, furniture, sporting goods equipment, restaurant meals, and merchandise ordered online. If the job market continues to gradually improve, Californians should keep shopping and help support the State's cash flow.
According to FTB statistics for 2011, Marin County had the highest median AGI -- just over $52,000 -- among counties.
Over 118,000 taxpayers filed returns from the county. San Mateo and Santa Clara Counties ranked second and third in income, with a median income of nearly $50,000 and $48,000 respectively. Returns from these two South Bay counties totaled just over 1.1 million.
Los Angeles County, with over 4 million returns and a median income of about $30,000, ranked 38th in income among the state's 58 counties. Imperial County’s 60,000 returns reported the lowest median AGI -- just above $23,000 and less than half the income of Marin, San Mateo or Santa Clara Counties.
According to FTB's annual report in 2011, there were 2.4 million taxpayers with adjusted gross income (AGI) exceeding $100,000. They accounted for 15.8 percent of the total 15.0 million residential taxpayers. Cumulatively, they reported $592 billion of the $982.1 billion (60.3 percent) in the year's AGI. Given the State's tax structure, these same taxpayers had $37.2 billion of the $43.9 billion (84.6 percent) of the year's residential income tax liability.
With no change in tax rates during the past year, this year’s personal income tax take is likely to trail last year's. Nevertheless, this will again be a vitally important few days for the State’s finances.
For the 2013 tax year, FTB will likely process roughly 15 million returns from residents. For a little perspective, for the 1947 tax year FTB had 784,709 residents' returns with a liability of $45.4 million. In 2011 (the last year for comparable data), FTB had 15,042,359 returns with a liability of $43.9 billion. That represents an average annual growth rate for returns of nearly 5 percent and for liability of over 11 percent.
Friday, April 11, 2014
Nearly 1.6 million taxpayers had an extension for the 2012 tax year. For those who are unable to make a timely tax return, FTB advises: If the taxpayer is due a refund, he or she must file their return by October 15, 2014. If the taxpayer has a balance due and wants to avoid penalties and interest, he or she must pay the amount owed by April 15, 2014, then file the return by October 15, 2014. (For more details on filing an extension, see FTB's website: https://www.ftb.ca.gov/individuals/faq/ivr/201.shtml).
Tax filings will ramp up dramatically next week, but withholding taxes will continue to flow into the State’s coffers, providing a good source of support.
Thursday, April 10, 2014
Personal income tax receipts are key to California’s fiscal picture. Through April 10th, they have reached $1.9 billion. The forecast for the April total is $10.9 billion.
Periodically, refunds issued on a given day can exceed revenues by a large margin. Such was the case on April 2 in contrast with last year on April 10. Now, with at least preliminary numbers available this month for the 10th, comparisons came be made. The result? April so far is running virtually identical to last year with refunds exceeding payments by about $86 million. The big refund bulge is now over and we should generally see positive net cash inflows for the balance of the month
For April as a whole, personal income tax receipts will be the dominant force, accounting for more than 80% of the state’s total tax receipts as individuals file their final returns and make their estimated tax payments.
Wednesday, April 9, 2014
Capital gains, earned primarily by wealthier Californians, are helping to fuel the State’s personal income tax receipts. Not so long ago, high-income taxpayers were required to make payments on a certain steady basis throughout the year. During the State’s cash shortages during the last 10 years, the payment schedule accelerated. The Franchise Tax Board advises taxpayers with the following: California differs from federal law. To avoid an estimate penalty, taxpayers must pay at least 30 percent by April 15 and 40 percent by June 16 of this year and 30 percent by January 15, 2015.
Tuesday, April 8, 2014
Monday, April 7, 2014
Tax tracker records collections in the three major taxes. Are there other revenues that are deposited in the General Fund? Levies on insurance, alcohol and horse racing are General Fund revenue sources. Interest on unclaimed property is deposited in the General Fund. Proceeds from levies of the VLF and property tax are not, as they are considered “local” taxes. Last week, the state completed the third quarter of the fiscal year.
Friday, April 4, 2014
The interest in the income tax returns was not always so great. Thirty years ago, when the state relied more heavily on sales tax revenue, budget watchers were more concerned about holiday sales receipts reported in December and January. Now, as expected, corporate tax and retail sales made little additional contribution to the revenue aggregate of California’s “big three” tax sources, leaving the total at about one billion dollars for the first few days of the month. This is a good first milestone for April.
With just three days of final numbers, refunds are exceeding payments, but this should soon change. Preliminary numbers show a strong number for withholding for April 4 ($412m).
Updated figures posted for yesterday, April 3 ($184m for PIT, 18.6m corp and 16.7m sales).
Thursday, April 3, 2014
The first ten working days of April typically provide little predictive information about how much taxpayers will file when their taxes come due. Last year, for example, the Franchise Tax Board reported that 60 percent of the entire income tax collected in April during a four-day period starting April 15.
April 2014 tax reporting not only helps budget writers monitor actual receipts for the 2013 tax year, it informs their thinking about the likely taxpayer behavior in 2014. So it helps them model likely tax receipts in April 2015. For example, it tells them something about the likely tax base. More than 60 percent of all income tax collections are derived from wages and salaries. If the 2013 tax returns show an increase in the wage and salary base, it is likely that the increase will continue in 2014.
Wednesday, April 2, 2014
Tuesday, April 1, 2014
What a difference a day makes… Final payments on the corporate tax are due on March 15, so each year there is a flurry of payment and processing activity at the Franchise Tax Board immediately after the Ides of March. This year, over 50 percent of all the March collections for this tax were reported on just two days—March 16 and 17. This pattern is persistent, with small variations. For example in 2013, a similar percentage of all collections were reported on March 17 and 18. We will see a similar flurry of activity for individuals around the middle of this month as April 15 appears.