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Deep Dive: Will California Go Broke? - Chamath Palihapitiya

chamath.substack.com · 568 words · saved by 1 readers

California is the 5th largest economy in the world, but 43% of its own residents say the budget is a "big problem." So let’s take a closer look at the budget...

California has a $4.3T economy, more than almost every country in the world. But the state’s finances depend heavily on a small number of people and a volatile source of income. In 2023, just 176,000 tax returns, roughly 1% of filers, generated 37% of California’s resident personal income tax. Much of that income comes from selling assets, so revenue rises sharply when markets are strong and falls when they turn. We can see that in the capital gains numbers. Californians realized $349 billion of gains in 2021, then $156 billion the following year. Revenue can move that quickly, while many…

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