Instead, the problem is a declining stock market — meaning rich people aren’t making as much money. That’s an issue in California, where a progressive tax system means the top 1% of earners pay close to half of the state’s income taxes.
The good times might soon be over for California’s government.
The nation’s most populous state has had so much cash lately that lawmakers have spent freely — handing out free health care to low-income immigrants, paying for every 4-year-old to attend kindergarten and sending more than $21 billion in stimulus checks to taxpayers over the past two years.
That seemingly endless flow of money has started to dry up as state tax collections have fallen below expectations for four months in a row. There’s now an 80% chance California will be about $8 billion short when its fiscal year ends next summer, according to the latest estimate from the nonpartisan Legislative Analyst’s Office.
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