March Goes Out Like a Lion

California’s tax receipts ended March more like a lion than a lamb, surpassing the $6 billion mark and beating both last year’s numbers and the projected total for this year by wide margins.

Totaling $6.1 billion, tax revenues from the state’s main three sources (personal income, corporate income, and sales tax) were nearly $400 million above estimates made for March earlier this year as part of the Governor’s Budget.  The number was close to $600 million higher than the total generated by the economy a year ago.  This year’s performance reflects the recovery in California’s economy and the strong gains in stock prices and home values.  Notably, all three major California sources joined in outperforming this year’s estimates and the year-ago figures.

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 and helps 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.