Individual income taxes are the single largest source of tax revenue in California. In 2002, individual income taxes provided nearly $10 billion more revenue than the state.s second largest source, the general sales tax. The individual income tax in California accounts for nearly 42 percent of state tax revenue, slightly higher than the national average of around 35 percent.

California relies more heavily on the individual income tax as a revenue source than do most other states. From the standpoint of the average resident, this translates to a higher individual income-tax burden than would be faced in most other states. Per capita, California residents paid $941.07 in state income taxes for every man, woman, and child in the state in 2002, while the U.S. average is $642.93.

One of the most important characteristics of an income tax, in terms of its economic effects, is the structure of the tax brackets and the rates within these brackets. Typically, an income tax will have several brackets, and the rate faced by an individual rises as he moves into each higher bracket. How rapidly the rate rises with income determines the degree to which the income tax is considered "progressive," a misleading term. Legislators and taxpayers should bear in mind that the more "progressive" the tax, the more burdensome and punitive it is to individuals.