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Budget Basics

California vs. Other States

How does California compare to other states? 

Unemployment

California represents the fifth-largest economy in the world and its 39.25 million residents give it the largest population in the United States. According to the Bureau of Labor Statistics, the unemployment rate dropped to 3.8% as of October 2019 as the economy has recovered. Total nonfarm employment grew 1.7% and government employment grew 1.5% from January to December 2019. The sector that saw the greatest growth over the time period is Education and Health Services, growing 3.4% over the 12 months.

Poverty

California has the 20th-highest poverty rate of 14% under the traditional poverty measure. Mississippi has the highest at 20%, while New Hampshire has the lowest of 7.6%. Due largely to the high cost of housing, California has the highest poverty rate under the Supplemental Poverty Measure (SPM), which takes cost of living into account. California’s SPM rate is 18.1% in 2020, compared to a national average of around 13.1% (three year average 2016-2018). Louisiana has the next highest SPM rate at 16.5%, followed by Florida at 16.2% and Mississippi at 15.8%. California's SPM rate has been gradually improving, from a recent peak of 20.4% in 2018.

Comparison of Tax Rate by Type

  • California has among the highest income tax rates for upper-income households and one of the lowest income tax rates for lower-income households. In 2017, the top 1% of income taxpayers in California accounted for over 47% of income tax revenue. 
  • State and local individual income tax collections per capita equaled $6,077 in California in 2019, the 8th-highest in the country.
    • Washington, D.C. has the highest state and local tax collections per capita ($10,841), while Alabama has the lowest ($3,206).
  • California has the highest state sales tax rate (7.25%) in the nation, but taxes few services compared to other states.
  • California has the 8th-highest corporation tax rate (flat tax of 8.84%) and corporation tax revenue is projected to account for 10.4% ($16 billion) of General Fund revenues in 2020-21.
  • California has below-average property tax rates, but higher property values. Californians paid $1,599 per capita in property taxes, the 17th-highest in the nation. The highest state and local property tax collections per capita are in Washington, D.C. ($3,535) and the lowest are in Alabama ($548). Property taxes generated 31.5% of total U.S. state and local tax collections in 2019.
  • California collects revenue much differently than other states. In many states, property taxes represent a greater proportion of revenues than income taxes. The situation in California is reversed due to Proposition 13, which limits property tax rates, and its highly progressive income tax structure.

California spends more total dollars for public services than other states largely due to its large population, so per-person (or "per capita") comparisons are the most useful. As of 2018, California ranked 23rd in spending per capita with $6,834. Alaska spends the most with $14,016 and Florida spends the least with $3,696. The U.S. average is $6,135.

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