Fact check: What are the largest sources of California state government revenue?

1. Summary of the results

California's state government revenue primarily comes from three major sources:

• Personal Income Tax, which is the largest revenue stream, with the top 1% of income earners contributing nearly half of all personal income taxes as of 2021 ^[1]
• Sales and Use Tax on physical merchandise purchases ^[1]
• Corporation Tax, which is set at a flat 8.84% on gross taxable income for businesses operating in California ^[1]

Additional revenue streams include:

• Cannabis excise tax, projected to generate $594 million in 2024-25 and $732 million in 2025-26 ^[2]
• Firearms and ammunition excise tax, which generated preliminary revenue of $29 million in the first half of 2024-25 ^[2]

2. Missing context/alternative viewpoints

Several important contextual points need to be considered:

• The state's revenue structure is becoming increasingly volatile due to its heavy reliance on capital gains from wealthy residents, which accounted for 11.3% of personal income in 2021 ^[1]
• The Sales and Use Tax revenue stream is declining over time as a percentage of total revenue ^[1]
• While current fiscal year projections show strong growth from the three largest taxes, future expectations are more conservative ^[2]

3. Potential misinformation/bias in the original statement

The question itself is straightforward, but understanding the revenue sources requires additional context about:

• The concentration of tax burden on high-income earners, which makes the state budget vulnerable to economic fluctuations affecting wealthy residents ^[1]
• The evolving nature of revenue sources, with traditional sources like sales tax declining while newer sources like cannabis tax are emerging ^{[2] [1]}

Those who benefit from highlighting certain revenue sources over others might include:

• Tax policy advocates arguing for or against progressive taxation
• Cannabis industry stakeholders highlighting their growing contribution to state revenue
• Business groups concerned about corporate tax rates
• Wealthy individuals and their representatives arguing against high personal income tax rates