California Reports Better July Tax Revenues, Just as Global Stock Markets Tank
Written by Chriss W. Street
California state personal income and corporation taxes revenues for July as the first month of FY 2024-2025, preliminarily came in +$1.26 billion, or +16.4 percent, above budget projections. The positive news came as the California tech-heavy NASDAQ stock index plunged by -3.34 percent.
California collects between 20 to 50 percent of its personal income tax collections each year from huge entrepreneurial gains from Silicon Valley, Santa Monica’s Tech Beach and Orange County’s Tech Coast. Personal income tax payments in July were up +$418 million, or +5.8 percent; withholding collections met the budget plan and Corporation taxes were up +$844 million, or +161.8 percent.
Despite the misery of the August 5th global stock crash, with Dow Jones Index diving by over -1,000 points and Japan stocks epically cratering down -16.7 percent, California Democrat Assembly advisor Jason Sisney reported that the broad index of U.S. stock prices measured by the S&P 500 is still up +15 percent from a year ago, and indexes remain 5.8 percent above the budget projections for the FY 2024-25 state budget.
California suffered a string of financial shocks in July, including a -98 percent downward revision of annual middle class job gains from a second high in the nation +311,000, to a bottom rung +9,000.
Mountain Top Times reported that as a result of rising poverty, 43 percent of Californians now receive Medi-Cal at a cost of $152 billion per year. Current Medi-Cal coverage includes four of ten new-born babies, three in seven children, two in nine non-senior adults, one in four seniors, and two in five people with disabilities.
In other bad news, California electricity cost doubled over the last decade to $774 per month, causing about 20% of Californians to not be able to pay their electric bill on time.
It is still too early to get California’s July employment gains and losses, but the unemployment rate was unchanged at 5.2 percent for the prior month of June 2024. California has been seeing jobs gains in government, private education, health services and utilities. But jobs gains were offset by losses in manufacturing, private sector services, construction, mining and logging.
Are the July tax revenue numbers really from July or possibly from mid to late June where the CA 2nd quarter income tax withholdings (a bit front loaded so no 3rd quarter is due 9/15) and the huge pass-thru entity tax election payments are both due June 15th? The pass-thru entity tax payment is 1/2 of the total prior year SALT tax and paid at the entity level. I'm aware of quite a few large payments that were made for the option of lowering the federal tax even before knowing whether there will be taxable income for 2024.