OC Political

A right-of-center blog covering local, statewide, and national politics

Posts Tagged ‘high taxes’

Taxes Due Today, But California’s Tax Freedom Day Isn’t Until May 3

Posted by Chris Nguyen on April 15, 2015

Tax Freedom Day in Each State – California is 47th Latest on May 3 (Graphic Courtesy of the Tax Foundation)

So if you’re like me, you’ll be finishing filing your income taxes sometime tonight.  I’m glad e-file has existed since I started filing income taxes.  It’d probably be a disaster driving to one of those postmarking-until-midnight Post Offices if I had to mail in my income taxes.

In fact, there’s only one Post Office in all of Orange County that will still be postmarking mail until midnight tonight: 3101 Sunflower Ave. in Santa Ana (the retail portion closes at 7:00 PM, but they’re still postmarking mail received by midnight). For those in northwestern Orange County, you can drive into LA County before 10:00 PM because the Post Office at 2300 Redondo Blvd. in Long Beach will be postmarking mail until then.

While today is the day we literally pay our income taxes, the figurative day in which we finish paying our taxes is still nine days away nationally and eighteen days away for California.

The Tax Foundation annually calculates Tax Freedom Day, which is the day in which people have earned enough money to pay all their taxes (income, payroll, sales, property, etc.) for the year, assuming no change in income level during the course of the year.  Any income earned after Tax Freedom Day will belong to the taxpayer (again assuming no change in income level during the course of the year).

National Tax Freedom Day for 2015 is April 24, though Tax Freedom Day varies by state.

The earliest Tax Freedom Day is in Louisiana on April 2, followed by Mississippi (April 4), South Dakota (April 8), and Tennessee and Alabama (both April 9).

The latest Tax Freedom Day is in Connecticut and New Jersey (both on May 13), New York (May 8), California (May 3), and Massachusetts (May 2).

That’s right: not only is California 47th in the nation, we’re also worse than Taxachusetts.

To look at this another way, the average Louisianan celebrates Tax Freedom Day on April 2, which is 92 days into the year, or 25.2% of the way into the year.  In other words, the average Louisianan pays 25.2% of their annual income in taxes.

The average Californian celebrates Tax Freedom Day on May 3, which is 123 days into the year, or 33.7% of the way into the year.  In other words, the average Californian pays 33.7% of their annual income in taxes, 8.5% more than the average Louisianan.

All of California’s neighbors celebrate Tax Freedom Day before California does: Arizona celebrates it today (17th in the country), Nevada on April 20 (26th in the country), and Oregon on April 22 (33rd in the country).

Posted in California, U.S. Politics | Tagged: , , | Leave a Comment »

New California Tax Policy – Retroactive Tax for Five Years WITH Interest

Posted by Cicero on March 26, 2013

Despite unanimous opposition from newspapers up and down the state, the Franchise Tax Board continues to stick by its decision to retroactively tax small businesses owners back five years for investing in California businesses. These are the people who are creating jobs and California is literally chasing them away.

One group of individuals is taking stand against the policy though – California Business Defense. The group will meet in San Diego next week and is specifically looking for more individuals who will be directly impacted by the policy. More information on the group and the status briefing in San Diego is available on the group’s website at www.cabusinessdefense.org.

Since 1993, small business owners and investors have been able to take advantage of a tax incentive that California actively promoted. The policy allowed stockholders who sold their share in a California business to reduce their tax liability by up to 50 percent or even 100 percent if the money from the sale was reinvested in a California business. The policy basically made it attractive for entrepreneurs to invest in small businesses and create jobs because it significantly reduced the tax liability for doing so.

Now though a court decided that this policy violated the commerce clause in the Constitution because it discriminates against out of state businesses. The FTB decided to embrace the court’s decision by retroactively taxing all the small business owners and investors who took advantage of the policy for the last five years. And not only that, but charge the tax WITH interest! The horrendous policy is expected to earn the state an easy $120 million.

But stop to think about what California is doing and the significance of what it means it could do in the future. These investors did exactly what they were asked to do by risking their own capital and investing in businesses in California. California promoted the tax break because it meant people were creating jobs and more people working. After receiving that benefit for two decades, California now wants to retroactively tax the very people that made the job growth possible. Some of those investments worked out and some of them did not but the FTB does not care and the tax will apply to all individuals even if they lost everything taking a risk to create jobs for California.

This policy has is so shocking that it has made national headlines on Fox News and Fortune, but the FTB stands by the decision. It has been likened to California changing the speed limit back down to 55 mph on highways, and then sending speeding tickets to everyone who drove over 55 for the last five years. That is exactly what is happening, and this decision by the FTB is the tipping point for many individuals, who can no longer justify the expense and risk of doing business in California. What message does it send to people considering starting a business if California can decide years down the road to penalize them for doing so?

Fortunately, Assemblyman Jeff Gorell, R-Camarillo and Sen. Ted Lieu, D-Torrance have stepped up in a bi-partisan effort to right the wrongs of the FTB. SB 209 would prohibit the state from charging interest and penalties in similar situations in the future.

At least one member of the FTB recognizes that this is a bad policy. In a letter to State Controller John Chiang, Board of Equalization Chairman Jerome E. Horton, and Director of Finance Ana J. Matosantos, Board Member George Runner urged them to reverse their decision to implement the policy. Despite the missive, no response has been seen from any of them.

California doesn’t need more laws to correct this policy. It needs needs policy makers with common sense. And this is another unfortunate example of exactly what is wrong with this great state.

 

 

Posted in Board of Equalization | Tagged: , , , , , , , | 3 Comments »