- js reader version
- view hidden posts
- tags and related articles
by Tim Messel
Tuesday, Nov. 03, 2009 at 7:40 AM
The tax that no one is talking about!
California to withhold a bigger chunk of paychecks
The amount goes up 10% on Sunday as Sacramento borrows from taxpayers. Technically, it's not an income tax increase: You'll get the money back eventually.
Reporting from Los Angeles and Sacramento - Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners -- holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.
Technically, it's not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers' annual tax bills won't change.
Think of it as a forced, interest-free loan: You'll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.
But with rising gas costs, depressed home prices and double-digit unemployment, the state's added reach into residents' regular paycheck isn't sitting well with many.
"The state's suddenly slapping people upside the head," said Mack Reed, 50, of Silver Lake. "It's appalling how brash that is."
Brittney McKaig, 23, of Santa Ana said she expects the additional withholding to affect her holiday spending.
"Coming into the holidays, we're getting squeezed anyway," she said. "We're not getting Christmas bonuses and other perks we used to get. So it all falls back on spending. The gift will become a gift."
The extra withholding may seem like a small amount siphoned from each paycheck, but it adds up to a .7-billion fix for California's deficit-riddled books.
From a single taxpayer earning ,000 a year with no dependents, the state will be grabbing an extra .59 each month, according to state tax officials. A married person earning ,000 with two dependents would receive .87 less in monthly pay.
California will probably continue to collect the tax at a higher rate for many years -- or find an additional .7 billion to slice from a future budget, an unlikely occurrence. All workers who have state taxes withheld will see their paychecks shrink.
"Many families are sitting at their kitchen table wondering how they're going to make ends meet," said state Sen. Tony Strickland (R-Thousand Oaks). "At the same time, the state of California is taking a no-interest loan."
The provision is one of numerous maneuvers state lawmakers and Gov. Arnold Schwarzenegger approved in the summer to paper over the state's deficit. Many of the changes, including the extra withholding, were little noticed outside of Sacramento.
Savvy taxpayers can get around the state's maneuver by increasing the number of personal withholding allowances they claim on their employer tax forms, said Brenda Voet, a spokeswoman for the state's Franchise Tax Board.
"People can get out of this," she said, noting that most people would have to change their allowances through their employers. California's budget leaders are banking on the hope that most won't.
The increase is coming at a bad time for store owners, many of whom depend on the holiday shopping season to keep their businesses alive.
"I don't think there's any question it's going to impact consumers' spending," said Bill Dombrowski, president of the California Retailers Assn. "Any time you reduce people's disposable income, there's going to be a negative effect on the retail sector."
But Stephen Levy, director of the Center for Continuing Study of the California Economy, wasn't so sure.
"It's having a relatively small impact on people's income," Levy said, pointing out that many families will receive only to less each month.
Yet Erika Wendt, 28, of San Diego said she already lived on a tight budget: She rides her bike to work, for instance, to save on gasoline and parking costs.
"I am frustrated as this directly impacts my weekly budget -- what groceries I buy, how much I drive and can spend on gas," she said. "Now money will just be tighter, and I'm not sure where else I can cut back."
The extra withholding comes in addition to tax hikes the state enacted this year.
In February, state income tax rates were bumped up 0.25 of a percentage point for every tax bracket. The dependent credit was slashed by two-thirds. The state sales tax rate rose 1 percentage point. The vehicle license fee nearly doubled to 1.15% of a car's value.
Lawmakers and the governor also approved deep cuts to schools, social services and prisons to fend off one of the steepest revenue losses in California history.
Temporary budget bandages, such as the increase in withholding, were included at several points this year to avoid higher taxes and deeper cuts, said H.D. Palmer, a spokesman for the state Department of Finance.
Sacramento, meanwhile, is awash in red ink again. The state controller recently said revenue in the budget year already had fallen more than billion short of assumptions. Outsize deficits are projected for years to come.
Such temporary measures as the withholding tax increase don't really fix the budget gap, "they just more or less hid it," said Christopher Thornberg, a principal with Beacon Economics in Los Angeles. "I call it a fraud."
Report this post as:
LATEST COMMENTS ABOUT THIS ARTICLE
Listed below are the 10 latest comments of 2 posted about this article.
These comments are anonymously submitted by the website visitors.
|You got it
||Arnold the Governator
||Tuesday, Nov. 03, 2009 at 8:54 AM
Change Links September 2018 posted
More Scandals Rock Southern California Nuke Plant San Onofre
Site Outage Friday
Change Links August 2018
Setback for Developer of SC Farm Land
More problems at Shutdown San Onofre Nuke
Change Links 2018 July posted
More Pix: "Families Belong Together," Pasadena
"Families Belong Together" March, Pasadena
Short Report on the Families Belong Together Protest in Los Angeles
Summer 2018 National Immigrant Solidarity Network News Alert!
Watch the Debate: Excluded Candidates for Governor of California
Change Links June 2018 posted
The Montrose Peace Vigil at 12 Years
Unity Archive Project
Dianne Feinstein's Promotion of War, Secret Animal Abuse, Military Profiteering, Censorshi
CA Senate Bill 1303 would require an independent coroner rather than being part of police
Three years after OC snitch scandal, no charges filed against sheriffs deputies
California police agencies violate Brown Act (open meetings)
Insane Company Wants To Send Nuke Plant Waste To New Mexico
Change Links May 2018
Worker-Owned Car Wash on Vermont Closed
GUIDE TO REBEL CITY LOS ANGELES AVAILABLE
lausd whistle blower
Help KCET and UCLA identify 60s-70s Chicano images
UCLA Luskin: Casting Youth Justice in a Different Light
Change Links April 2018
More Local News...
Creative Destruction Hack Diamonds Windows/iOS/Android - Creative Destruction Generator
The Dictatorship of Corporations
18 Lethal Consequences Of Hunting
Paraphysique de l'outplacement déontologue
Creative Destruction Hack Mod Generator
Shopping du bashing
After Lehman Brothers, Experts Say Global Financial Crisis Can Happen Again
“Animaniacs in Concert!” Starring Voice Legend Rob Paulsen
Probabilités de fin d'humanité
Florida Area of Migrant Farmworkers Denied Right to Construct Health Clinic near NaplesCIW
Propagande de virus, virus de propagande
Steer clear of work morality!
Sweatshop Lodge Ceremony Continues in US Fed Prisons Led by Inmates
Paraphysique de l'origami
The Shortwave Report 09/07/18 Listen Globally!
August 2018 Honduras Coup update
Du réussissement putréfié
Brett Kavanaugh Filled The 5th Circuit With Execution Judges
Augusta Georgia Woman Gets 5 Year Prison Sentence for Writing About Russians Crime Acts
Paraphysique de contextualité
Crisis Regulation in Global Capitalism
Ex-voto de réification
Please Oppose Warmonger, Execution and Torture Supporting Bush Operative Brett Kavanaugh
Paraphysique d'exploitation occultation
Ryan Zinke Is Charging Taxpayers For A Trophy Hunters' Council
Is the Financial Crash 2.0 Coming?
More Breaking News...