Will the State Tax System Be Reformed?

The sales tax in California may be the nation's highest, but 53% of state revenues come from the income tax. That creates problems, because incomes rise and fall with the stock market and the economy, creating the ups and downs that defy planning and lead to continuing budget crises. Governor Schwarzenegger and the legislature created the Commission on the 21st Century Economy to develop a new system. The Commission's final report won't be presented until later this week, but its principal features are known. It would eliminate the sales tax and the corporate income tax and flatten the personal income tax by eliminating the top brackets. Lost revenue would be replaced by something called the Business Net Receipts Tax or BNRT.