Edward Conard

Top Ten New York Times Bestselling Author

  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
Upside of Inequality Oxford Unintended Consequences

AI Summary. California now draws more than 60% of its revenue from personal income taxes, compared with about 11% in the early 1950s when sales and use taxes supplied nearly 60%. The state's top 1% of taxpayers — roughly 170,000 filers — paid about 40% of personal income tax revenue, payments that depend heavily on unpredictable capital gains.

Michael Moritz Financial Times
Date Posted:
Is Database:
Database

In 1950, sales taxes accounted for ~60% of California’s revenue, and personal income taxes accounted for 11%. In recent years, the personal income tax share has risen to ~60%, with the top 1% of California taxpayers responsible for ~40% of the revenue.

How dependent is state revenue on a small group of taxpayers?

Core argument: In 2022, California's top 1% of taxpayers — about 170,000 payers — paid roughly 40% of the state's personal income tax revenues, payments that are highly contingent on unpredictable capital gains.

In 1957, Fairchild Semiconductor, the company that spawned Silicon Valley, was formed by eight men — only one of whom was born in California. At the start of that decade the state’s population was about 10.5mn and only about 11% of its revenue of $1.1bn came from personal income taxes. The sales and use tax (levied on products not services) accounted for almost 60%. Today, California’s population is about 39.5mn while its budget is about $320bn (not including the $174bn the state receives from Washington for social welfare programmes). Since 1990, the budget has grown at an average rate of 6% a year. Compared to the 1950s, the source of the state’s revenue has entirely flipped. In recent years personal income taxes have contributed more than 60% of the total. This revenue rests on a foundation of jelly. In 2022, the top 1% of California taxpayers — just 170,000 payers — coughed up about 40% of all the state’s personal income tax revenues. Worse still, these payments are highly contingent on unpredictable capital gains.

Takeaways by Macro Roundup® AI

  1. In 2022, California's top 1% of taxpayers — about 170,000 payers — paid roughly 40% of the state's personal income tax revenues, payments that are highly contingent on unpredictable capital gains.
  2. California's revenue mix has flipped since the 1950s, when personal income taxes supplied about 11% of $1.1bn in revenue and sales and use taxes nearly 60%; in recent years personal income taxes contributed more than 60%.
  3. California's budget has grown at an average 6% a year since 1990 to about $320bn, excluding $174bn received from Washington for social welfare programmes, with population up from about 10.5mn in the early 1950s to about 39.5mn.

Related Articles:

  • Ed Conard Debates Furman On “The Expected Value of Risk Taking” — A debate on U.S. fiscal policy argues that spending increases, rather than the tax increases needed to fund them, slow growth, and that higher taxes would reduce the expected value of America's innovative risk-taking. The argument holds that cutting debt below 100% of GDP is critical.
  • California Keeps Losing Tech Jobs — California's share of US tech jobs has fallen from nearly 19% before the pandemic to nearly 16%, including a further 0.4% decline over the past year. The remaining jobs skew high-paying: California's share of information-sector compensation is slightly above its pre-pandemic peak, with nearly a third of all tech wages and benefits going to state residents.
  • Behavioral Responses to State Income Taxation of High Earners: Evidence from California — A California ballot measure raising top marginal income tax rates by up to 3 percentage points prompted an additional 0.8% of the affected tax base to leave the state, with an estimated income elasticity of 2.5–3.2 for high earners who stayed. The authors estimate these responses eroded 45.2% of windfall revenues within one year and 60.9% within two.
Showing 48 database articles primarily about Taxation