S&P Says California’s Fiscal Problem is the “Tax Code”

June 22, 2012 by · Leave a Comment
Filed under: General, S&P 

The Los Angeles Times reports an unusual move by Standard & Poor’s (S&P) into highly partisan politics by asserting that California’s fiscal problems stem from the tax code. This, says S&P, is the “core problem.”

The agency sidestepped the key Republican argument that California’s dire financial straits are the result of uncontrolled spending. Instead the LA Times quotes S&P as saying, “We don’t see the state’s existing spending level as the key source of its budget distress,” S&P’s report said. “In fact, the state is currently spending less as a share of its economy than it has at any point in the past 39 years.”

The report also went on to explain that they believe tax revenues have grown too slowly and have become increasingly unreliable due to the state’s over-reliance on taxing the very wealthy. Whereas the richest 1% provided 2.7% of the state’s general revenue funds in 1972, in 2010 it was up to 11%.

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