In California, state taxes have always played an important role. At the end of the 21st century, the state of California spent a large amount of money to provide public services to the residents of California and the local businesses. The money spent has been provided by the state taxes.

Three-quarters of the state treasury and one-half of the local shares are all provided by taxes. The taxes levied by California State are all included as State Taxes. The personal income tax or PIT, the sales and use tax or SUT, the bank and corporation tax and major motor vehicle-related levies account for a major share of California's own-source revenue.

The income tax, the sales tax and the bank tax finance the state's General Fund. The largest single tax that is generated by the residents of California is the PIT. This Tax accounts for over half of the General Fund revenue. The rest of the state expenditure is taken care of by the special funds. These special funds are generated by the motor vehicle-related taxes. Special funds include tobacco-related taxes and sales taxes.

These funds support health programs and local governments. Personal Income Tax: Established in 1935, the personal income tax or PIT is the state's single largest revenue source. In the year 2000, California collected over $35 billion as income tax.

This tax accounts for roughly 40 percent of all revenues and half of General Fund revenue. The Personal income tax is levied on both residents and nonresidents. Non-residents pay taxes on income derived only from California sources. In 1998, there were over 13 million PIT returns filed, which include 600,000 from nonresidents.

Personal Income Tax also applies to proprietorships, partnerships, estates and trusts. The income offered by the Sub-chapter S corporations is subject to PIT taxation. Wages and salaries, interest, dividends, business-related income and capital gains are also included in the Income Tax. One of the key articles that make California Income tax unique is that single taxpayers only account for 45 percent of total filed returns, but only 26 percent of tax liabilities. Married-filing-joint taxpayers constitute 40 percent of total tax returns, but over 68 percent of tax liabilities.

Bank and Corporation Tax: California taxes corporate profits. The Bank and Corporation Tax or BCT is the state's third largest source of General Fund revenue. The tax raises annually an estimated $6.1 billion or 9 percent of the total. The BCT applies to all corporations that earn income derived from or that is attributable to sources in California. Except for the first two years of operation of a firm, the basic tax rate on profits is 8.

84 percent and an $800 minimum tax. Banks and financial institutions are exempted on local levies, but pay a higher rate of tax, which is 10.84 percent. Banks and corporations are also subjected to an Alternative Minimum Tax or AMT, which is similar to the personal income tax or PIT. This Alternate Minimum Tax has a slightly lower rate of 6.

64 percent. Sub-chapter S corporations are subjected to a reduced tax rate of 1.5 percent.

California offers a share of the domestic or worldwide business income for multi-state and multinational corporations.

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