Our forecast model assumes that California resident tax filers’ wage and salary income surpasses $1 trillion for the first time in 2017. Between 2012 and 2018, we assume that wages and salaries for all resident California taxpayers grow at an average annual rate of about 5 percent—similar to the growth rate in recent decades. Employment growth, inflation, and changes in labor productivity contribute to rising wages and salaries throughout the economy. Capital Gains Drive PIT Volatility. Net capital gains made up only 6 percent of AGI in 2010 and 3 percent in 2009, but this relatively small part of overall income is the most difficult.
