Sunshine Tax Increasing?

Why is it that each year (especially so in recent years), the legilators in Sacramento are called to fit a square peg into a round hole? How are tax estimates so far off when it comes to putting a state budget together. This year could be rationalized by the depth of the recession we are in/coming out of, but it could also be a sign that tax revenues have become more volatile.

• Housing prices have severely fluctuated in California over the past few years


• The psychological effect of "big housing wealth" in the earlier part of this decade encouraged homeowners to borrow and spend, thus increasing sales tax revenues. Quite the opposite now.


• How will high a high unemployment rate affect tax revenues for next year budget process?

To combat tax volatility and to continue to pay for government services, expect both state and federal governments to look for new "things" to tax. With greater corporate & workforce mobility, state competition could lure business away from the state. A fine line for the California tax man to walk...