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Posted: 11/3/2009 3:31:03 AM EST
[Last Edit: 11/3/2009 4:28:28 AM EST by MK262]


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.


By Shane Goldmacher and W.J. Hennigan

October 31, 2009

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 $40 gift will become a $20 gift."

The extra withholding may seem like a small amount siphoned from each paycheck, but it adds up to a $1.7-billion fix for California's deficit-riddled books.

From a single taxpayer earning $51,000 a year with no dependents, the state will be grabbing an extra $17.59 each month, according to state tax officials. A married person earning $90,000 with two dependents would receive $24.87 less in monthly pay.

California will probably continue to collect the tax at a higher rate for many years –– or find an additional $1.7 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 $12 to $40 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 $1 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."

shane.goldmacher@ latimes.com

william.hennigan@ latimes.com

Copyright © 2009, The Los Angeles Times

Link Posted: 11/3/2009 3:34:12 AM EST
yeah, but I can surf in janury, pack up and go snowboarding to the mountains and be back at my bev hills house to bbq in 80 degree weather

all while wearing shorts
Link Posted: 11/3/2009 3:36:52 AM EST
Time for everyone to change their exemptions to compensate.

Seriously, that's some grade A bullshit. Reminds me of the last days of this guy.
Link Posted: 11/3/2009 3:37:01 AM EST
How is this legal?

Posted Via AR15.Com Mobile
Link Posted: 11/3/2009 3:38:49 AM EST
Originally Posted By sixnine:
How is this legal?

Posted Via AR15.Com Mobile


"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."

It's the government they deserve.
Link Posted: 11/3/2009 3:38:57 AM EST
This is going to be the blueprint of how all of these states going broke are going to try to pay for it all.
Link Posted: 11/3/2009 3:39:38 AM EST
here's a thought, how about a 10% decrease in the fucking money it gives to the parasites?

Who is John Galt?

TXL
Link Posted: 11/3/2009 3:41:10 AM EST
Originally Posted By Admiral_Crunch:
Time for everyone to change their exemptions to compensate.


Time for everyone to change their exemptions so that they owe the state a little bit on April 15.
Link Posted: 11/3/2009 3:41:18 AM EST
"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.





I guess this would be too much like thinking...




Link Posted: 11/3/2009 3:41:26 AM EST
Anyone think they will pay you back after you passed away???
Link Posted: 11/3/2009 3:42:09 AM EST
Money seized from the taxpayers to support the freeloading invaders.
Link Posted: 11/3/2009 3:42:29 AM EST

Cali has now moved from punishing its own government employees to stealing from everyone in the state (everyone that isn't on welfare). I don't even know what to say or where to begin. Maybe 'green shoots'! lol...

Link Posted: 11/3/2009 3:42:35 AM EST
[Last Edit: 11/3/2009 3:43:28 AM EST by david_g17]
This is why some states are pushing for federal government healthcare.

State run universal healthcare is bankrupting them; they want other states to pay for it.

Crap like this is just a temporary solution until they can ram federal healthcare down our throats.
Link Posted: 11/3/2009 3:43:30 AM EST
Let me guess... they'll pay back their zero-interest mugging with IOUs that can't be cashed until 2043?
Link Posted: 11/3/2009 3:44:26 AM EST
California is one place where a tax on everything sold there would make sense.

Since the illegals which make up almost 10% of their southern population and pay no taxes.

So put a 15% tax on everything.
Link Posted: 11/3/2009 3:45:18 AM EST
I wonder if this will cause more people to get fed up and vote accordinly or cause more people to get fed up and leave?
Link Posted: 11/3/2009 3:46:06 AM EST


Link Posted: 11/3/2009 3:48:57 AM EST
They can do that.....

or

They could cut spending.
Link Posted: 11/3/2009 3:49:49 AM EST
Originally Posted By david_g17:
This is why some states are pushing for federal government healthcare.

State run universal healthcare is bankrupting them; they want other states to pay for it.

Crap like this is just a temporary solution until they can ram federal healthcare down our throats.


And we have a winner.

States that are run almost reasonably will be mugged to pay for California, and the 55 members in Congress from CA will force it on us at the point of a gun.
Link Posted: 11/3/2009 3:51:48 AM EST
“A government big enough to give you everything you want, is strong enough to take everything you have." - Gerald Ford
Link Posted: 11/3/2009 3:52:30 AM EST
Link Posted: 11/3/2009 3:53:36 AM EST
Yea, California is definitely better than Texas.
Link Posted: 11/3/2009 3:54:16 AM EST
Originally Posted By Tactical_Jew:
yeah, but I can surf in janury, pack up and go snowboarding to the mountains and be back at my bev hills house to bbq in 80 degree weather

all while wearing shorts




Other than your mommy not allowing you to cross the street and/or you're the guest of local, state or Federal authorities at an all men's communal living institution ––––––––––––––––––––––- it's fairly easy to rectify the problem...



Just move...





Link Posted: 11/3/2009 3:55:59 AM EST
Oh goody, california just got a new credit card.
Link Posted: 11/3/2009 3:56:16 AM EST

Originally Posted By Electronrider:
This is going to be the blueprint of how all of these states going broke are going to try to pay for it all.

This! Don't be surprised if Obongo does it on the national level....
Link Posted: 11/3/2009 4:00:52 AM EST
Originally Posted By Bubbles:
Originally Posted By Admiral_Crunch:
Time for everyone to change their exemptions to compensate.


Time for everyone to change their exemptions so that they owe the state a little bit on April 15.


And you don't need receipts for charitable contributions of less than $250. Just sayin'.
Link Posted: 11/3/2009 4:06:10 AM EST

Originally Posted By mr_camera_man:
Let me guess... they'll pay back their zero-interest mugging with IOUs that can't be cashed until 2043?

+++++++++++
Link Posted: 11/3/2009 4:08:03 AM EST
Why did they stop at 10%?
Link Posted: 11/3/2009 4:12:00 AM EST
So California just walked down to the "Payday Loans" store and got a cash advance?

Great.
Link Posted: 11/3/2009 4:12:31 AM EST
Link Posted: 11/3/2009 4:13:30 AM EST
You'll get the money back eventually.


Famous last words....

No wonder people are leaving that state in droves. Pretty soon, they'll have to tax the remaining people 100% just to live there.

HH
Link Posted: 11/3/2009 4:14:22 AM EST
Pretty soon, they'll have to tax the remaining people 100% just to live there


When the taxes do reach 100% can we call it communism then?

Link Posted: 11/3/2009 4:18:36 AM EST
This shit is really getting out of hand.
Link Posted: 11/3/2009 4:19:48 AM EST
[Last Edit: 11/3/2009 4:27:43 AM EST by John_Wayne777]
Link Posted: 11/3/2009 4:22:06 AM EST
Somehow, someway, they will still end up collecting less tax revenue by doing this.
Link Posted: 11/3/2009 4:23:39 AM EST
Link Posted: 11/3/2009 4:24:44 AM EST
Why yes, I have 12 dependent children...

What can I say? I love pie!
Link Posted: 11/3/2009 4:24:44 AM EST
[Last Edit: 11/3/2009 4:25:32 AM EST by pale_pony]
oops, tapped it again!
Link Posted: 11/3/2009 4:25:00 AM EST
"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.


And they won't. Too lazy.
Link Posted: 11/3/2009 4:26:09 AM EST
Originally Posted By 1Bigdog:
They can do that.....

or

They could cut spending.




yeah, like that's ever going to happen
Link Posted: 11/3/2009 4:30:37 AM EST

Originally Posted By AR-10:
Somehow, someway, they will still end up collecting less tax revenue by doing this.

Right before the christmas retail season and in the largest economy in America.

This could be the straw that broke the camel's back.
Link Posted: 11/3/2009 4:34:15 AM EST
So what is the total tax burden on median income Californians, anyway? Federal and state income taxes combined, I mean.


Florida is a no income tax state. I like that a lot.
Link Posted: 11/3/2009 4:36:59 AM EST
[Last Edit: 11/3/2009 4:38:28 AM EST by Admiral_Crunch]
Originally Posted By david_g17:
This is why some states are pushing for federal government healthcare.

State run universal healthcare is bankrupting them; they want other states to pay for it.

Crap like this is just a temporary solution until they can ram federal healthcare down our throats.




We have this wonderful universal healthcare system. Unfortunately, it has one small problem in that it's bankrupting our entire fucking state. The most logical course of action is to make this national, so that we bankrupt every fucking state. Then we'll all be equally fucked, and we won't look so fucking idiotic anymore.

Fuck.
Link Posted: 11/3/2009 4:37:34 AM EST

Originally Posted By Molotov357:

Originally Posted By AR-10:
Somehow, someway, they will still end up collecting less tax revenue by doing this.

Right before the christmas retail season and in the largest economy in America.

This could be the straw that broke the camel's back.


That's kinda what I thought too.

At what point do people in California just say "enough is enough"? I know moving isn't as easy as it sounds, especially if you've got a house and you're under water already.

Link Posted: 11/3/2009 4:38:17 AM EST
Originally Posted By RightwingNutjob:
I wonder if this will cause more people to get fed up and vote accordinly or cause more people to get fed up and leave vote from the roofs like a Korean grocer during a riot?



Fixed. No charge.
Link Posted: 11/3/2009 4:41:56 AM EST
California is being run into the ground because of the Liberals with their socialist programs.
Link Posted: 11/3/2009 4:42:29 AM EST
People ought to be hanging politicians by now.
Link Posted: 11/3/2009 4:51:04 AM EST
Where's that article about how much more awesome and 'dignified' California is than Texas?
Link Posted: 11/3/2009 4:57:22 AM EST

Originally Posted By cmjohnson:
So what is the total tax burden on median income Californians, anyway? Federal and state income taxes combined, I mean.


Florida is a no income tax state. I like that a lot.

What about those license and title rate hikes? While FL isn't grabbing directly out of our paychecks yet, they're well on their way. If the economy gets worse and we start losing more tourists expect the money grubbing to get more creative.
Link Posted: 11/3/2009 5:00:25 AM EST
[Last Edit: 11/3/2009 5:05:18 AM EST by nightstalker]
California is a high tax, high service model, Texas, just the opposite, low tax, low service model. Except what has happened is CA has failed to deliver the high service and Texas has delivered better than expected. The result is that per capita spending in CA is over $10,000 and in Texas it is $6900 and the schools are probably better in Texas now and most importantly, the economic climate is definitely better.

With the Unions exerting so much political clout, CA is going to have a tough time changing.


Between April 1, 2000, and June 30, 2007, an average of 3,247 more Americans moved out of California than into it every week, according to the Census Bureau. Over the same period, Texas saw a net gain, in an average week, of 1,544 people. Aside from Louisiana and Mississippi, which lost population to other states because of Hurricane Katrina, California is the only Sunbelt state that had negative net internal migration after 2000. All the other states that lost population to internal migration were Rust Belt basket cases, including New York, Illinois, New Jersey, Michigan, and Ohio.
Link Posted: 11/3/2009 5:03:08 AM EST
[Last Edit: 11/3/2009 5:04:32 AM EST by California_Kid]
I'd hate to be someone who does payroll work today.

Those people will be mobbed by employees filing forms to increase their withholding exemptions.

More predictable unintended consequences.

Originally Posted By 1Bigdog:
Why did they stop at 10%?


They probably understand at some level that the harder they push people for free loans, the more of us will bother increasing our withholding exemptions.
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