The details are not yet known—at what price the shares list, how many Facebookers cash out, and so forth. But back-of-the-envelope calculations by Mr Sisney suggest that California might get a windfall of $2 billion over the current and coming fiscal years, and possibly billions more if the shares trade well. (via Economist)
- In California such mathematical games bring giddy memories of the dotcom boom in the 1990s, and of the previous big listing, by Google, in 2004. That particular IPO led to $7 billion in windfall tax revenues over the subsequent three years, by minting a new batch of millionaires with income and capital gains to declare.
- Viewed differently, this is the sort of thing that helps make California’s finances so dysfunctional. The state relies much more on personal, and specifically capital-gains, taxes than it did a generation ago or than most other states do today. This makes revenues volatile and leads to bad budgeting in good years, and fiscal crises in tough ones. Hence the perennial call for tax reform—which, unfortunately, dies down whenever the next boom beckons.