California likes to tax the rich. A lot.
The top 1 percent of earners provides about half of personal income tax revenue, by far the largest source of funding for the state government.
The downside is that when the stock market goes bust, so does California’s budget. Experts, from Gov. Jerry Brown on down, are well aware of the problem, yet the politically perilous task of overhauling the volatile tax system has failed to gain traction for years.
Can Gavin Newsom change that? Among a laundry list of other big and ambitious policy goals, the Democratic governor-elect has expressed interest in revising the state tax structure. With revenues booming and a historic Democratic supermajority elected for the next legislative session, this may be his best chance.