Sunday, August 19

California sales tax revenue down 40 % from last July???

As my four readers may know, I'm pretty good with numbers. And while numbers can obviously be fudged or cooked, when an entity reports numbers that are harmful to its own interest, one tends to take notice.

A week ago California's state controller reported that the state's sales tax revenue for July was lower than for the same month last year.

That's odd, because the state didn't reduce its tax rate, and population is probably growing very slightly. But let's be conservative and call it flat. In that case, what could account for the drop?

Oh, wait...I left out a significant number: California's sales tax revenue was off 40 percent from last year.

At first I thought that figure had to be four-point-zero, but it really is forty percent.

Now, big entities--the U.S. gummint, big states and huge corporations--have a huge amount of inertia, so their statistics almost always change only slowly. Absent civil war or a change in the law that would push sales tax collections to a different month, I don't know of any legitimate reason for sales tax to drop by 40% from a year ago. The figure is so incredibly unlikely as to suggest there's a big error somewhere.

The link above is to a report released by the state controller's office, so the reported 40% drop isn't just a baseless rumor. The report has a narrative by the controller, which starts by saying July is normally the second-lowest income month for the state. All well and good but that would have no bearing on why this year is 40% lower than the same month last year.

It's been reported that people are leaving CA, but I doubt the state has lost more than a percent or so of its population. It's possible that distressed businesses looking at approaching failure didn't remit their sales tax, but again, hard to see how you could get more than a percent or two from that cause.

I'm mystified. I don't think the controller's office is lying because this is basically an admission against interest.

Sure would be nice if some reporter in Sacramento would ask the controller's office whether they really believed the reported 40% drop was correct; and if so, what they thought the reason for the reported drop might be.

To understand how much of an anomaly this is, imagine if a state government reported that their state had lost 40% of its population in a single year. Wouldn't you find that very hard to believe? Of course. And this is exactly the same thing.

Something doesn't track here.


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