California's budget forecast looks to be off by about $3.7 billion, according to the state's independent legislative budget analyst. So California's equivalent of a budget committee is proposing a sweeping package of reforms, including a sales tax on services. Along with a cuts in and simplification of the state's income tax, an adviser told The Economist that the tax reform would be “only very slightly more regressive” because the poor would get a sales-tax rebate and "rich people tend to spend more on services (on accountants, lawyers, fitness instructors, etc)."
The changes would have to be approved by California's voters. The super committee is aiming at next November's ballot. If California did adopt the proposed tax on services, it would join only a couple of other states in taxing legal services, and would be the only state with a substantial population to do so. (Florida and Massachusetts have passed a tax on services in the past, but both repealed the tax before it took effect.)
