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“Sell off!” “Crash!” Investors bracing for “uncertainty.”

After plummeting early this week, Wall Street rallied on Tuesday, recovering some, but not all, of what had been lost. What implications does the drop have specifically for California?

In an interview on Tuesday afternoon, Annette Vissing-Jorgensen, a professor of finance at the University of California, Berkeley’s Haas School of Business, put the market decline in context for the Golden State.

Here are some things to keep in mind:

The market’s impact on capital gains – and the state budget

When the stock market goes down, the amount of money Californians who sell stock must pay in capital gains taxes also decreases. The state’s tax code is very progressive, which, in this case, Dr. Vissing-Jorgensen said, compounds the problem.