Which is to say: as predicted by me. I had a feeling that California’s surprisingly high tax revenues in January were due to people rushing through existing taxable transactions before that state’s new rates kicked in; and lo! …I seem to have been correct.
The surge of revenue that showed up unexpectedly in state coffers last month may well be offset by a revenue dip in coming months, according to Gov. Jerry Brown’s administration.
[An official California Budget office cash] report says the extra money was “likely the result of major tax law changes at the federal and state level having a significant impact in the timing of revenue receipts.”
Translation: it turns out that people – as usual – make their financial decisions via rational self-interest. Give them a choice to legally avoid paying higher taxes, and it looks like they’ll take it. Also: amazingly, people are a lot more conservative about their own money than they are about everybody else’s. (more…)