Taxifornia: California's tax system, comparisons with other states, and the path to reform in the Golden State
March 01, 2010 Filed in: Budget &
Finance
Robert P. Murphy, Ph.D. and Jason Clemens, California
Prosperity Project, Pacific Research Institute
In a quest for solutions,
this second installment of the California Prosperity Project
assesses California’s tax burden, the structure of its tax system,
and how both of these affect the state’s competitiveness. The
research on which this study is based shows that taxes matter. When
we impose taxes on certain things, we basically tend to get less of
those things. Taxes influence decisions concerning work effort,
savings, investment, entrepreneurship, risk taking, and job
creation. These are all things California needs. Additional work,
greater investing by individuals and businesses, and more
entrepreneurship are the foundations for a prosperous society.
Understanding how tax rates, and in particular marginal tax rates,
influence these activities is critical in understanding the
challenges facing California…