By TOM RUSSELL and MIKE GOLDBERGPublished April 19, 2018 06:15:32California tax cuts would boost economic growth by as much as 3.8% in the state and could help spur economic growth, according to a new study.
The California Tax Foundation released a study on Thursday that estimated that a three-year, $100 billion tax cut would create more than 500,000 jobs, boost the state’s gross domestic product by 0.7% and generate an additional $1.1 trillion in revenue over the next decade.
California is in the midst of a major tax overhaul that would take effect in the coming years, but the state is also struggling with a high unemployment rate and high inflation that has already hit a record low.
California Governor Jerry Brown has called for a state-wide sales tax hike of 4% on all goods and services, with an additional 1% on services such as education and public safety.
The state is currently proposing a 5% sales tax on items such as food, tobacco, alcohol, clothing and cosmetics.
The study said the tax cut will likely increase overall economic growth because it would result in an increase in sales tax revenue and therefore, employment.
It said the impact on the unemployment rate would be negligible and the economic impact would be limited to the local economy.
The tax cut, which will increase taxes on individuals and businesses, will increase revenue to the state, which is estimated to be $10 billion, according the study.
The tax cut is expected to generate $1,857 per person in sales taxes and $1 billion in income taxes, it added.
The state is expected pay a total of $15.2 billion in property taxes, $4.9 billion in sales and $4 billion in other taxes for the next three years, the study said.
A state-by-state comparison of California’s tax rate structure is not available, but a state study last year found that the state has the highest corporate tax rate in the country.
