Eliminate the State Income Tax

During a discussion at the 2015 Cal Tax Annual Members meeting, I called for a meaningful public discourse on tax reform ideas that makes life easier for taxpayers. I suggested replacing California’s income tax with a sales tax on services.

If you want real tax reform, we ought to look at eliminating the state’s personal and corporate income tax. One less tax agency would make California a far more attractive place for jobs, retirees and investment.

If California eliminated income tax more companies would base themselves in California. Also, more residents would stay in the state upon retirement, leading to more revenue for the State of California.

Seven states do not have an income tax. Those states include Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

True tax reform makes tax systems simpler, rather than more complicated. Senate Bill 8 (Hertzberg), which would extend sales tax to services, is a massive tax increase. In its current form the legislation would make California’s tax system more complicated and add thousands of state auditors and tax collectors to state payrolls.

Any shift to a broader reliance on sales tax must be combined with real tax reform that removes barriers to doing business in our state. Don’t be seduced by false reform that makes California’s tax code more complicated for everyone.

A dynamic economic modeling of the likely benefits of an elimination of income tax and a shift to a consumption-based tax system is needed. Businesses should conduct their own modeling to weigh the pros and cons of such a structure.

Originally published by Fox and Hounds Daily

George Runner is Member of the California State Board of Equalization, District 1


  1. I’ve got a better idea, eliminate Sales Tax and eliminate the STUPID regressive, unfair, expensive Inventory Tax. It cost millions to inventory every year to pay a tax on something that is necessary for a business to MAKE MONEY to employ people that pay taxes.

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