California has a highly progressive income tax structure, meaning that as one's taxable income rises, so does one's average tax rate.
In 1996, marginal tax rates will range from 1 to 9.3 percent.
The top 7 percent of taxpayers -- those with incomes exceeding $100,000 annually -- will account for nearly 50 percent of total tax liabilities in 1996. This share is slightly lower than in 1995, primarily because of the scheduled elimination of the 10 percent and 11 percent tax brackets.
Tax expenditure programs (TEPs) are the various tax exclusions, exemptions, preferential tax rates, credits, and deferrals which reduce the amount of revenues collected from the state's "basic" tax structure.
There are currently nearly 300 TEPs, including about 200 state-level TEPs and over 70 local property tax TEPs, which can impose state costs because the state backfills the lost local revenues.
The largest TEPs include income tax deductions for mortgage interest expenses, income tax exclusions for employer contributions to pension plans, and sales tax exemptions for general foodstuffs.
State-level TEPs cost $20~billion when last estimated in 1991-92.