California State Controller John Chiang offers this daily tax tracker to follow personal income taxes, sales and use taxes and corporate taxes -- the three major sources of revenue for the State.

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.

Monday, April 21, 2014

California Looks to Personal Income Growth

California's personal income tax receipts are holding up so far this April despite only moderate growth in personal income during 2013. For April 1-18, 2014, personal income tax receipts (PIT) net of refunds totaled $8.6 billion, according to final figures. This puts the month-to-date total at 80% of the target for the total month, which is essentially identical to the ratio achieved at the same time a year ago.

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.  

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