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Who Pays Taxes

Fund Sources

Measured as a share of family income, California’s lowest-income families pay the most in taxes. The poorest fifth of the state’s non-elderly families, with an average income of $13,200, spent 11% of their income on state taxes. In comparison, the wealthiest 1%, with an average income of $2.2 million, spent 7.8% of their income on state taxes.

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California Budget Project

California Tax Reform Association

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Public Policy Institute of California

MB Forms Pub

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Tax Fairness

  • "Taxes are the price we pay for living in a civilized society."
    - Oliver Wendell Holmes, former US Supreme Court Justice

    California has long relied on mostly short-term solutions to our budget problems, which has done us no long-term favors. The health of California's public schools depends on stable tax revenues. It is time to demand action to restore fairness to the system and make sure everyone is paying their fair share.

    The bottom 20% of wage earners in California pay 11% of their income in taxes, while the top 1% of wage earners only pays 7.8%. Corporate income grew over 400% from 2001-2008 compared to 28% for personal income. And additional tax loopholes were provided to big corporations in the 2008 and 2009 budgets, worth $2 billion annually.

    The cost of funding state services has shifted from corporate to personal income tax payers. When Proposition 13 was passed, responsibility for funding public schools shifted from the taxpayer to the state. Now the state is in financial crisis and cannot foot the bill. We must reevaluate how we are funding our government and make it fair and equitable. The fact of the matter is California is a moderate tax state, ranking 15th in taxes and fees compared to other states, even though we have the 8th largest economy in the world.

    Investing in public education (dollar for dollar) grows the economy more than tax cuts and corporate subsidies. Dishearteningly California currently ranks 49th in per-pupil spending. Our goal is simply to have the adequate amount of per-pupil funding needed to provide all students the opportunity for a quality public education.

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Absent Graph

The Prop 13 Effect

Tax burden has steadily shifted from businesses to homeowners
Large corporate property owners have been Prop 13’s biggest beneficiaries, thanks in part to loopholes.

More Info

  • The Basics of California's School Finance System
    Every summer, the California Legislature and governor decide how much money will go to kindergarten through 12th grade public education and how it will be divided. Although some changes occur each year, the system has looked about the same for more than 25 years.
  • Sharing the Burden of Recovery
    With the state facing ongoing yearly deficits of $20 billion, the survival of basic services and a healthy public sector is at stake. To address this looming future, the burden of recovery must be shared fairly — in contrast to the current path by which public services, the poor and education have taken the largest cuts and the middle-class has borne the increased tax burden.
  • What Makes a Tax System "Fair"?
    This Budget Backgrounder from the California Budget Project describes what economists generally believe makes a tax system fair, examines how fair California’s tax system is, and discusses why fairness matters.
  • Where Do State Tax Dollars Go
    The State budget is actually a "local budget," which spends more than 70 cents of every tax dollar supporting local communities, such as healthcare services, public safety, and public education. In other words, these dollars support services that impact the lives of every Californian.
  • Tax Cuts Widen the Budget Gap
    When states cut taxes, typically they must make up for the lost revenues by reducing spending, and expenditure cuts tend to reduce any positive impact that tax cuts might have on state economies.

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