Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place.”     Frederick Bastiat

July 21, 2009

Lies, Damn Lies, and California Budget Proposals

by Quincy

The news out of Sacramento appears good for the California middle class:

The good news, Schwarzenegger glowed, is no new taxes.

Digging a little deeper, of course, reveals the truth:


* Accelerate income tax withholding — $1.7 billion
* Increase estimated tax payments for businesses and the self-employed — $610 million

Between now and the end of the year, $2.3 billion will be extracted from the economy in more aggressive tax collection. Where is that money going to come from? Everyone who works:

It also raises $4 billion by in part accelerating personal and corporate income tax withholdings and increasing income tax withholding schedules by 10 percent.

The state will take 10% more than it does today out of every paycheck issued in the State of California. That means that the Californian trying to stay afloat on a mortgage, pay medical bills, or send a kid to school will have less money to do it. The Californian out trying to support local businesses will have less money to do it. The Californian who lives paycheck-to-paycheck will have less money to survive.

Since this is a withholding change, the taxpayer should get the excess withheld back on next year’s tax return. That, though, won’t undo the foreclosure that happened because a Californian couldn’t pay his mortgage. It won’t make right the bankruptcy that occurred because a Californian couldn’t pay her medical bills. It won’t bring back the corner store that went under because people couldn’t afford to shop there.

The simple fact is that this budgetary shell game will cause each and every worker to pay more to the State of California in taxes. The state is so desperate to pass a budget that it is almost certain that this tax hike will pass. All I ask is that the clowns in Sacramento have enough respect for the taxpayers to level with us and admit that their budget contains $2.3 billion in tax hikes…

Fat chance.

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  1. Maybe, you could do better. I doubt it.

    Comment by John/ San Diego — July 21, 2009 @ 7:50 pm
  2. So, since the state of California has horrible credit, they are now forcing their citizens to give them interest free loans to cover the gap in the budget. I suppose it might sound like a good idea, having the state get the money they need without any interest, but the individuals could certainly find places to put their money that have a higher interest than zero, like just about anywhere else.

    Comment by Peter — July 22, 2009 @ 5:41 am
  3. Given the precarious state of California’s economy, I’m betting that these ill-conceived tax hikes will not bring in the revenue that the state thinks they will. Businesses will close, jobs will be lost, and fewer people will have paychecks to from which taxes can be withheld.

    Comment by Quincy — July 22, 2009 @ 6:32 am
  4. If the state can’t make its obligations this year, and they are going to take an extra 10% in withholding, how can we be assured that next year when we are due the refund including the extra 10% as they state, that the state will have revenue to pay back the tax payer with something other then I.O.U’s?

    Also notice that the cuts are in areas that will anger the public rather then in other wasteful spending by the state.

    I am sure that there are other programs in the state that could be cut or eliminated without having to corner the taxpayer by cutting programs that are important to the future success of California and its citizens.

    Remember that we are being told that we will need to be trained for the jobs of the future so how can we be trained if we cut the programs that are supposed to train us?

    I thought that education was one of the most important areas we should invest in, (we hear it during every election cycle) we are told by the government and anyone running for election that education is most important yet it always appears to be one of the first things that the government cuts when they have budget woes.

    When will the people of California as well as the rest of the U.S. going to wake up and realize that they are being manipulated. Is there anyone who possesses critical thinking skills anymore?

    Please don’t waste mine or others time commenting about my grammar or spelling, stick to the subject at hand, “The California State Budget and the cuts made to support it”.

    Comment by common sense — July 22, 2009 @ 9:10 am
  5. If the state can’t make its obligations this year, and they are going to take an extra 10% in withholding, how can we be assured that next year when we are due the refund including the extra 10% as they state, that the state will have revenue to pay back the tax payer with something other then I.O.U’s?

    That’s a great question. In fact, there is no guarantee that withholding won’t stay higher and that citizens won’t get IOUs. This *is* a tax hike, even if our self-styled overlords in Sacramento choose to give us some of it back, eventually.

    Comment by Quincy — July 22, 2009 @ 10:04 am
  6. Here’s my question:
    If you Californians get an IOU for your tax refund this year, do you deduct it directly off of what you owe next year? Adjust your withholdings so that you owe more than that at tax time, and just don’t send the relevant amount.

    Comment by tfr — July 22, 2009 @ 10:18 am
  7. Can anyone explain how withholding can be included by the PMIB in their assessment and how MY money, withheld by Ca., is not there to give back to me as a refund?

    Comment by Dana — July 28, 2009 @ 1:59 pm
  8. tfr –

    Underwithholding is a crime in California, so you can’t really do that. Plus, since this move is designed specifically to get money into the current fiscal year, I’d bet trying to do that is a fast track to getting prosecuted.

    Dana –

    It’s an accounting trick. They get your money to spend this year, and spent it will be. Your refund will actually be taxes paid by someone else next year, assuming the state has the revenue to do so.

    Comment by Quincy — July 28, 2009 @ 9:00 pm
  9. “Accounting trick” seems a bit kind. This is just a stunt to close the budget gap, next year the budget gap will therefore be bigger. It does not fix anything, it just postpones the problem until next year, the typical politician way of dealing with problems.

    Comment by Peter — July 29, 2009 @ 6:07 am
  10. It’s not underwitholding if I’m having enough money taken out of my check to pay my tax burden. I don’t think there is any law or legislation that requires that I have to have money available for them to borrow.

    Comment by Craig Baltz — August 3, 2009 @ 7:19 pm

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