is on track to collect $5 billion more in tax revenue this month than estimated in Governor Jerry Brown's
budget, and the [Legislative Analyst's Office] can’t say why, yet."
High-income earners may have cashed out investments early in anticipation that federal income taxes would rise as part of a Congressional deal over avoiding automatic tax increases, the [LAO] Office said [January 30]... U.S. levies on capital gains rose to 20% from 15% under this month’s agreement...January
is also the final deadline for ‘estimated tax’ payments for the prior calendar year,” the [LAO] said... “Estimated taxes are paid mainly by individuals reporting capital gains, business income, and other income not subject to withholding.”
Another reason...may be that wealthy residents, who have to pay higher state income levies retroactively under a tax increase voters passed in November, chose to pay a portion of their obligations [in January] instead of in April. Or it simply could be that the higher state rates are generating more revenue than forecast as the economy improves.
“As we always caution, you can’t assume or build a long- term trend -- good or bad -- off of one month’s worth of data, because any number of factors can swing one month either way,” said H.D. Palmer, Brown’s budget spokesman...
...Personal income-tax withholdings are 12% higher than projected, while estimated payments already received are more than double the amount anticipated for the month, according to the report...
The tax boost [Prop 39] and spending cuts mean the state will end fiscal 2014 with an $851 million budget surplus, the first in a decade...
The surplus reflects Brown's decision not to revoke spending cuts in subsidized child care.
News tip thanks to Nina Buthee at California Child Development Administrators Association.