Brunoro Law Blog

Tuesday, September 27, 2016

Kiplinger Ranks California as Nation’s Least Tax-Friendly State

Why are taxes so high in California?

Financial and business forecaster Kiplinger has named California as the nation’s least tax-friendly state for the second time in a row.  Kiplinger looked at numerous factors, including sales tax, income tax, gas tax, and alcohol and tobacco tax.  California residents were taxed high in several areas.  While California has a 7.5 percent sales tax, several cities now have additional localized sales tax, which brings the state average in sales tax to 8.48 percent. 

Income tax in the state is considered low for those in the lower income brackets, but among the highest for high earners.  Additionally, California imposes an 11.6 percent tax on wireless services and substantial taxes on beer, liquor, and cigarettes.  In comparison, nearby Nevada does not impose a statewide sales tax and charges just a two percent tax on wireless services. 

Another area of taxation not specifically discussed by Kiplinger, but one many Californians are concerned about, is property taxes.  Property taxes in the state of California are notoriously high, and this can impact a home owner’s ability to maintain or sell their home. 

Understanding Tax Rates in California

Taxation is linked to several factors, including services provided by the government.  California is a progressive state with a wide variety of state offered services, contributing to taxation rates statewide.  Additionally, California has a number of environmental rules and regulations that impact the tax rate placed on gas and other commodities. 

High tax rates in California can make it difficult for individuals and businesses to survive and thrive.  The good news is that there are steps you can take to lower the amount you pay in taxes.  Individuals and businesses are encouraged to consult with an experienced California tax attorney.  Your tax attorney can review your current exposure and advise you as to ways to potentially decrease your taxes.  Potential ways to save include taking advantage of deductions, of which California offers many, and reducing your taxable income, both individually and for your business. 


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