January 13, 2015


State & Local Taxes in 2015


California Tax Code Features

Progressive Features

• Graduated personal income tax structure

• Provides personal income tax credits in place of personal and depen­dent exemptions

• Sales tax base excludes groceries

• Requires the use of combined reporting for the corporate income tax

Regressive Features

• Comparatively high combined state and local sales tax rate

• Fails to provide a refundable Earned Income Tax Credit (EITC)

• Fails to provide a property tax “circuit breaker” credit for low-income non-elderly taxpayers

Tax Changes Enacted in 2013 & 2014

• No significant changes enacted

ITEP Tax Inequality Index

According to ITEP’s Tax Inequality Index, California has the 49th most unfair state and local tax system in the country, making it one of the least regressive tax systems. States with regressive tax structures have negative tax inequality indexes, meaning that incomes are less equal in those states after state and local taxes than before (See Appendix B for state-by-state rankings and more details).

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