December 8, 2014
What is the Economic Statistic, "Personal Income?" Personal income is a broad measure of economic activity in California. It measures wages and salaries and various other types of income, but it excludes capital gains (income resulting from sales of assets, such as stocks and homes).
Why Is California's Personal Income Tax So Volatile? Personal income taxes are the largest state revenue source. As this graphic shows, these taxes are much more volatile than statewide personal income. This is partly because California taxes capital gains, which are especially volatile and mainly go to high-income taxpayers who pay the highest tax rates. These taxpayers’ other income also tends to be volatile.