California’s tax revenue has been surprising, with better-than-expected figures recently. Much of this boost comes from the tech industry.
According to state officials, tax collections from personal and corporate income taxes, which are major sources of revenue for California, are significantly higher than predictions. Experts believe this increase is largely due to payments from tech companies and their employees.
This surge is particularly noticeable in personal income tax collections, noted H.D. Palmer from the state Finance Department.
He added that tech firms, especially those linked to artificial intelligence, are major contributors to this revenue growth.
This month, Governor Gavin Newsom and his team predicted that revenues for the current three-year budget cycle would top previous expectations by $16.5 billion, around a 2.7% increase.
Rich Pedroncelli/Associated Press
That was notably higher than earlier forecasts. Since April, personal income tax numbers were also up, by $4.9 billion, according to state budget reports.
California’s corporate tax collection has shown a similar uptick. During the same period, it received $4.9 billion more than expected.
The state is likely continuing to benefit from these positive trends. Jason Sisney, a budget advisor, recently reported that California collected substantial sums in December — $12.4 billion in personal income taxes and $10.3 billion in corporate taxes, surpassing budget forecasts.
Analysts suggest that the tech industry’s success is a significant factor behind these increasing revenues.
Marc Benioff, CEO of Salesforce, speaking at Dreamforce in San Francisco recently.
Craig Lee/The Examiner
Tech companies often compensate their employees with stock, which means that as stock prices rise, tax payments increase as well. For example, if an employee of Meta sees their stock vest at a peak price, their taxable income dramatically rises, leading to higher taxes.
Companies like Nvidia and Google also benefited from rising stock prices, indicating tax payments from these entities could significantly contribute to state revenue.
Apple CEO Tim Cook during a product announcement on September 12, 2023.
Jeff Chiu/Associated Press, File
Changes to tax credits could also impact how much companies like Apple and Meta pay in state taxes, which may further contribute to higher state revenues.
Moreover, tech firms make up a big part of the state’s taxable income due to their large employee bases and stock-based compensation practices.
state budgets, initial public offering, ipo, compensation, nvidia, taxes, california budget, california taxes, gavin newsom, salesforce, uber, apple, meta
