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Californians Among Highest Taxed in U.S.

1 min readBy: Joseph Bishop-Henchman

As California debates taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. levels, Dan Walters at the Sacramento Bee reminds us that Californians are among the highest taxed in the United States at present:

The Tax Foundation calculated Californians’ state-local taxes in 2008 at 10.5 percent of personal income. That translated into about $170 billion in revenue and the nation’s sixth-highest percentage. New Jersey was highest at 11.8 percent, followed by New York, Connecticut, Maryland and Hawaii.

That was in 2008. In 2009, however, then-Gov. Arnold Schwarzenegger and the Legislature enacted about $9 billion a year in temporary income, sales and car taxes.

Those taxes are now expiring and Brown is seeking a five-year extension.

More specific data from the Tax Foundation and other sources indicate that California’s income and sales taxA sales tax is levied on retail sales of goods and services and, ideally, should apply to all final consumption with few exemptions. Many governments exempt goods like groceries; base broadening, such as including groceries, could keep rates lower. A sales tax should exempt business-to-business transactions which, when taxed, cause tax pyramiding. es are particularly high, compared with those of other states, while overall corporate taxes are a bit below average and property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. es fall somewhere in the middle.

While Proposition 13, enacted in 1978, strictly limits property tax rates, the state’s relatively high property values push property tax bills into the upper ranks. In 2009, the Tax Foundation says, California property taxes as a percentage of value on owner-occupied houses were 44th in the country, while the median tax bill of $2,839 was 10th highest, nearly $1,000 above the national average.

As Californians try to get their desired level of services in line with projected revenues, comparing the costs of taxes with the benefits received is key, and knowing that the cost is currently very high is an important piece of information.

See our property tax by county and state lookup tool here.

More on California here.