California’s budget woes have focused attention on a key problem: revenue volatility. The state could reduce volatility ” and improve its business climate ” by moving toward greater use of consumption taxes. This report reviews concerns about the current tax system and evaluates five options for consumption-based tax reform. It finds that broadening the retail sales tax and restructuring the corporate income tax may provide the most straightforward path to reform.
This report was supported with funding from the Donald Bren Foundation.