This Week's Tax Take Reaches $7.7 Billion

As Californians rushed to meet the April 15th tax deadline, the state saw a strong inflow of funds.  Based on preliminary numbers for Friday, total collections of personal income taxes (PIT), corporate taxes, and sales taxes, totaled approximately $7.7 billion for the five days through April 18th.  This represents nearly 60% of the total goal or projection for the month.  

The Franchise Tax Board’s (FTB’s) statistics can segregate taxpayers by adjusted gross income.  It reports that in 2011 there were nearly 15 million resident returns.  Of these, the “wealthiest” returns--1.5 million (that is, the “top 10 percent”)--had a minimum adjusted gross income (AGI) of about $133,000.  The wealthiest one percent of resident returns listed a minimum AGI of over $460,000. 

 

Of California's three major revenue sources, only retail sales taxes are still falling short of projections, but Easter shopping this weekend could reverse that trend.  Consumers have indicated that they expect to spend an average of $137 for the holiday so perhaps they will be busy this weekend.

 

California Posts Further Job Gains in March

California's economy continues to expand as evidenced by the latest jobs report.  California added nearly 12,000 jobs in March compared with February.  This puts the year-to-year gain at a solid 325,000, or 2.2%, which means that the state is outperforming the nation which recorded a rise of 1.7%.

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.

Individual Tax Payments Surpass $1.0 Billion for Third Day

As Californians' tax payments continue to come in and be tabulated, they are quite strong.  Final figures for April 17 show that personal income tax payments net of refunds exceeded $1.0 billion for a third consecutive day.  Corporate tax payments also remain strong and retail sales taxes may be starting to catch up -- probably reflecting late Easter shopping, retail sales taxes as of today, April 18, reached $74 million.  This is about three times the daily volume we have recently seen on a strong day.

Taxes paid on capital gains are likely to receive attention over the next few weeks.  The Franchise Tax Board’s (FTB’s) statistics tell us something about who pays these taxes. In its most recent data, for the 2011 tax year, FTB reports that taxpayers reported $52.1 billion in gains and paid $4.2 billion in tax on those gains.  Over 90 percent of all the gains were reported by taxpayers with adjusted gross income (AGI) in excess of $200,000.  These high-income taxpayers paid over $4.0 billion (96 percent) of the tax on capital gains in 2011.   Taxpayers reporting AGI exceeding $10 million reported $20 billion (38 percent) in capital gains and paid $1.7 billion (39 percent) of the capital gains tax.