California has clearly hit a wall, which also opens the state to the possibility of truly positive change.
Last week a bi-partisan commission appointed by the Governor and legislature to find solutions to the state’s budgetary and fiscal problems recommended an overhaul of the state’s tax system. Specifically, the commission recommended that the state lower its top marginal personal income tax rate from 10.55% to 7.5% and that the state replace its state corporate and sales taxes with a tax on business net receipts. This lower rate would broaden the tax base making it much easier for budgeting. Additionally, several gubernatorial candidates appear to support a flat tax.
Out of the ashes of California, we may see a green shoot.
See my thoughts on tax reform in my earlier Fox and Hounds post.