{"id":2406343,"date":"2025-02-25T09:07:57","date_gmt":"2025-02-25T14:07:57","guid":{"rendered":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-reports-corporate-sales-tax-revenue-estimates-down-amid-stock-growth-washington-examiner\/"},"modified":"2025-02-25T09:12:01","modified_gmt":"2025-02-25T14:12:01","slug":"california-reports-corporate-sales-tax-revenue-estimates-down-amid-stock-growth-washington-examiner","status":"publish","type":"post","link":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/california-reports-corporate-sales-tax-revenue-estimates-down-amid-stock-growth-washington-examiner\/","title":{"rendered":"California reports corporate, sales tax revenue estimates down amid stock growth &#8211; Washington Examiner"},"content":{"rendered":"<aside class=\"mashsb-container mashsb-main mashsb-stretched\"><div class=\"mashsb-box\"><div class=\"mashsb-count mash-medium\" style=\"float:left\"><div class=\"counts mashsbcount\">28<\/div><span class=\"mashsb-sharetext\">SHARES<\/span><\/div><div class=\"mashsb-buttons\"><a class=\"mashicon-facebook mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/www.facebook.com\/sharer.php?u=https%3A%2F%2Fwww.conservativenewsdaily.net%2Fbreaking-news%2Fcalifornia-reports-corporate-sales-tax-revenue-estimates-down-amid-stock-growth-washington-examiner%2F\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Facebook<\/span><\/a><a class=\"mashicon-twitter mash-medium mash-nomargin mashsb-noshadow\" href=\"https:\/\/twitter.com\/intent\/tweet?text=&amp;url=https:\/\/www.conservativenewsdaily.net\/breaking-news\/?p=2406343&amp;via=ConservNewsDly\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Twitter<\/span><\/a><a class=\"mashicon-subscribe mash-medium mash-nomargin mashsb-noshadow\" href=\"#\" target=\"_top\" rel=\"nofollow\"><span class=\"icon\"><\/span><span class=\"text\">Subscribe<\/span><\/a><div class=\"onoffswitch2 mash-medium mashsb-noshadow\" style=\"display:none\"><\/div><\/div>\n            <\/div>\n                <div style=\"clear:both\"><\/div><\/aside>\n            <!-- Share buttons by mashshare.net - Version: 4.0.47--><p>The Legislative \u2063Analyst\u2019s Office (LAO) of California has\u2063 reported\u2064 a decline in corporate and sales tax revenue estimates,highlighting potential economic issues despite significant stock market growth. Although <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/new-analysis-shows-republican-tax-cuts-actually-did-cut-middle-class-taxes-despite-democrats-rhetoric\/\" title=\"New Analysis Shows Republican Tax Cuts Actually Did Cut Middle-Class Taxes, Despite Democrats\u2019 Rhetoric\">personal income tax revenues<\/a>\u2064 are projected \u2064to \u2062exceed\u2063 previous forecasts by $5.8 billion \u2062for the 2024-2026 fiscal years, corporate taxes are estimated to be $1 \u2064billion and \u2064$3\u200c billion \u2063lower than expected for the same period. Sales tax\u200d revenues are also anticipated to be $400 million below projections.<\/p>\n<p>The LAO\u200d warns that the\u2062 increase in income tax collections does not reflect a robust economy, indicating stagnant job markets and consumer spending.This surge is primarily tied to stock market performance, specifically the booming \u2064S&#038;P 500, which has seen \u200cover a 50% increase\u2063 in two years.Caution is urged regarding reliance on stock-driven revenues, as several signs indicate that the current market conditions may not be sustainable.<\/p>\n<p>The LAO has noted that a single company, Nvidia, is largely responsible for a significant portion of the gains in the S&#038;P 500, which\u2062 raises concerns about potential implications for state \u200dfinances if Nvidia experiences losses. Additionally, historical trends suggest that\u200b a disconnect can exist\u2062 between revenue \u200cgrowth and the overall economic\u2063 health of the state, advising against equating tax\u200d revenues directly with economic performance.  <\/p>\n<p class=\"readmore\">\n    <button onclick=\"showReadMore()\" id=\"readmorebtn\">Read more&#8230;<\/button>\n<\/p>\n<hr id=\"line\">\n<span id=\"more\"><\/p>\n<p><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><?xml encoding=\"utf-8\" ?><\/p>\n<div class=\"tdb-block-inner td-fix-index\"><span class=\"tdb-mobile-menu-button\"><i class=\"tdb-mobile-menu-icon td-icon-mobile\"><\/i><\/span><\/div>\n<div class=\"tdb-block-inner td-fix-index\"><span class=\"tdb-header-search-button-mob dropdown-toggle\" data-toggle=\"dropdown\"><i class=\"tdb-mobile-search-icon td-icon-search\"><\/i><\/span><\/div>\n<div class=\"tdb-block-inner td-fix-index\"><\/div>\n<div class=\"tdb-block-inner td-fix-index\"><span class=\"tdb-mobile-menu-button\"><i class=\"tdb-mobile-menu-icon td-icon-mobile\"><\/i><\/span><\/div>\n<div class=\"tdb-block-inner td-fix-index\">\n<div class=\"tdb-drop-down-search\" aria-labelledby=\"td-header-search-button\">\n<div class=\"tdb-drop-down-search-inner\">\n<form method=\"get\" class=\"tdb-search-form\" action=\"https:\/\/www.washingtonexaminer.com\/\"><\/form>\n<div class=\"tdb-aj-search\"><\/div>\n<\/div>\n<\/div>\n<p><a href=\"http:\/\/www.washingtonexaminer.com\/#\" role=\"button\" aria-label=\"Search\" class=\"tdb-head-search-btn dropdown-toggle\" data-toggle=\"dropdown\"><i class=\"tdb-search-icon td-icon-search\"><\/i><\/a><\/div>\n<div class=\"tdb-block-inner td-fix-index\"><\/div>\n<div class=\"tdb-block-inner td-fix-index\">\n<h1 class=\"tdb-title-text\">California reports corporate, sales tax revenue estimates down amid stock growth<\/h1>\n<div><\/div>\n<div class=\"tdb-title-line\"><\/div>\n<\/div>\n<div class=\"tdb-block-inner td-fix-index\"><\/div>\n<div class=\"tdb-block-inner td-fix-index\"><\/div>\n<div class=\"tdb-block-inner td-fix-index\">\n<div id=\"Brid_2018463\" class=\"tpd-featured-video bridtv\"><\/div>\n<p>(The Center Square) &ndash; The state-funded Legislative Analyst&rsquo;s Office says corporate and sales tax revenue estimates are down, suggesting poor overall economic health.<\/p>\n<div class=\"article-paywall\">\n<p>The LAO reported these losses are more than made up for by stock market growth, but warned &ldquo;several hallmarks of prior unsustainable stock market booms appear present today&rdquo; and that lawmakers should &ldquo;not equate revenues and the economy.&rdquo;&nbsp;<\/p>\n<p>The LAO estimated personal income tax revenues will come in $5.8 billion higher than the governor&rsquo;s initial projections for both the 2024-2025 and 2025-2026 fiscal years.<\/p>\n<p>But the office also estimated corporate taxes will come in $1 billion lower than expected for the 2024-2025 fiscal year and $3 billion lower than expected for 2025-2026 fiscal year. Sales taxes estimates also are trending downward, with revenues estimated to be $400 million lower than expected for both the 2024-2025 and 2025-2026 fiscal years.&nbsp;<\/p>\n<p>Combined, this data suggests the broader state economy is not doing as well as expected, with relatively weak overall corporate and consumer health papered over by tax growth from the owners of high-performing assets.&nbsp;<\/p>\n<p>&ldquo;Surging income tax collections do not seem to be tied to a clear improvement in the state&rsquo;s economy. Both the job market and taxable consumer spending remain stagnant. Instead, the surge appears linked to the strength of the stock market,&rdquo;&nbsp;<strong><a href=\"https:\/\/lao.ca.gov\/LAOEconTax\/Article\/Detail\/777\">wrote<\/a><\/strong>&nbsp;the LAO. &ldquo;The S&amp;P 500, for example, has grown over 50 percent in the last two years. This has boosted the earnings of high-income Californians and, in turn, income tax collections.&rdquo;<\/p>\n<p>The LAO suggested caution with regards to reliance on stock-driven state revenue, noting the market&rsquo;s current position could be unsustainable.<\/p>\n<p>&ldquo;Whether the stock market surge is sustainable is impossible to say, but several hallmarks of prior unsustainable stock market booms appear present today. The boom seems to be driven by a narrative, in this case optimism about advances in artificial intelligence, that has a basis in truth, but also a potential for overreaction,&rdquo; continued the LAO. &ldquo;Measures of how &lsquo;expensive&rsquo; stocks are have <a href=\"https:\/\/www.conservativenewsdaily.net\/breaking-news\/u-s-cheers-candid-talks-with-china-after-months-of-rising-tensions\/\" title=\"U.S. celebrates positive talks with China amid escalating tensions.\">reached historically high levels<\/a>. And investors are going into increasing amounts of debt to buy stocks.&rdquo;<\/p>\n<p>The LAO said even if dynamics are unsustainable, a negative change in the market may not come for some time.<\/p>\n<p>&ldquo;Even if a reversal is on the horizon, it may not come for some time. Similar observations could have been made in 1998, but the stock market and the state continued to experience a boom for two more years,&rdquo; said the LAO. &ldquo;A similar dynamic is possible today.&rdquo;<\/p>\n<p>In an earlier report, the LAO&nbsp;<strong><a href=\"https:\/\/lao.ca.gov\/Publications\/Report\/4939\">said<\/a><\/strong>&nbsp;that the state&rsquo;s stock market tax revenue has overwhelmingly come from a single company, Nvidia &mdash; which means Nvidia losses could have an outsized impact on state finances.&nbsp;<\/p>\n<p>&ldquo;Current stock prices relative to companies&rsquo; past earnings (a common measure of how &ldquo;expensive&rdquo; stocks are) are at levels rivaled only by the transitory booms of 1999 and 2021,&rdquo; wrote the LAO. &ldquo;Furthermore, a single company (Nvidia) accounts for about one&#8209;third of the total gains in the S&amp;P 500 stock index over the last year.&rdquo;<\/p>\n<p>In an additional&nbsp;<strong><a href=\"https:\/\/lao.ca.gov\/LAOEconTax\/Article\/Detail\/822\">report<\/a><\/strong>&nbsp;to state lawmakers and officials titled &ldquo;Five Guidelines for Using Revenue Forecasts,&rdquo; the LAO further warned about conflating revenue with the state of the economy, citing the state extremely high unemployment in the 2020-2021 fiscal year amid massive revenue growth, and slow revenue growth in the <a href=\"https:\/\/amzn.to\/3YuVZYV\">2016-2017 fiscal year amid strong employment growth<\/a>.<\/p>\n<p>&ldquo;Do not equate revenues and the economy,&rdquo; warned the LAO. &ldquo;Revenues are shaped by many factors, such as financial market conditions, the state&rsquo;s tax structure and taxpayer behavior, that often have a tenuous connection to the broader economy. As a result, revenue trends can diverge considerably from trends in the state&rsquo;s economy.&rdquo;<\/p>\n<\/div>\n<p> <script data-cfasync=\"false\" src=\"http:\/\/www.washingtonexaminer.com\/cdn-cgi\/scripts\/5c5dd728\/cloudflare-static\/email-decode.min.js\"><\/script><script>!function(){var g=window;g.googletag=g.googletag||{},g.googletag.cmd=g.googletag.cmd||[],g.googletag.cmd.push(function(){g.googletag.pubads().setTargeting(\"has-featured-video\",\"true\")})}();<\/script><script>var _bp=_bp||[];_bp.push({\"div\":\"Brid_2018463\",\"obj\":{\"id\":\"27789\",\"width\":\"1280\",\"height\":\"720\",\"stickyDirection\":\"below\",\"video\":\"2018463\"}});<\/script><script defer src=\"https:\/\/services.brid.tv\/player\/build\/brid.min.js\"><\/script><\/div>\n<div class=\"tdb-block-inner td-fix-index\"><\/div>\n<div class=\"tdb-block-inner td-fix-index\"><\/div>\n<p><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>California&#8217;s corporate and sales tax revenue estimates decline<\/p>\n","protected":false},"author":1,"featured_media":2406344,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_mo_disable_npp":"","fifu_image_url":"https:\/\/www.washingtonexaminer.com\/wp-content\/uploads\/2023\/10\/15d55fa7a52ef8e7d788ddc5e47fdb65-1024x591.jpg","fifu_image_alt":"","footnotes":""},"categories":[],"tags":[4045,51036,51037,37750,51038],"class_list":["post-2406343","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-california","tag-corporate-tax","tag-revenue-estimates","tag-sales-tax","tag-stock-growth"],"fifu_image_url":"https:\/\/www.washingtonexaminer.com\/wp-content\/uploads\/2023\/10\/15d55fa7a52ef8e7d788ddc5e47fdb65-1024x591.jpg","_links":{"self":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2406343","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/comments?post=2406343"}],"version-history":[{"count":3,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2406343\/revisions"}],"predecessor-version":[{"id":2406347,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/posts\/2406343\/revisions\/2406347"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media\/2406344"}],"wp:attachment":[{"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/media?parent=2406343"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/categories?post=2406343"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.conservativenewsdaily.net\/breaking-news\/wp-json\/wp\/v2\/tags?post=2406343"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}