Currently, California relies disproportionately on high-income earners. As can be expected, states that rely the most on the wealthy now have the largest budget gaps to fill as the downturn in the economy has left these state governments scrambling for cash. As the
map below indicates, California is not alone in its reliance on the top 1% of earners.
The danger of relying on the top earners is that the wealthy have wildly fluctuating incomes, which means that California state revenues will also fluctuate. If funds are not set aside in a rainy day fund during economic booms (which they haven't been) then during an economic downturn, tax revenues dry up. One of the major concerns of Governor Brown's newest tax proposal is that it relies, to an even greater extent, on the wealthy--adding 3% to California's top tax bracket.
