5 ms·

California to withhold a bigger chunk of paychecks

27 points by absconditus 17y ago

fnid 17y ago
Think of it as a forced, interest-free loan: You'll be repaid any extra withholding in April. Yeah, sure. They are already paying their debts with IOU's. They didn't pay people's refunds last year, was it? This seems pretty wrong to me. Are they going to repay it with another loan? Who is going to loan them money? The only way out of the debt spiral is to stop spending, not taking on more debt.
- slpsys 17y ago
  They gave IOUs for refunds, then paid them fairly quickly. I filed mine electronically on April 10th or so, and received my refund within a few weeks--it's not like they just didn't pay. I don't disagree on the whole, though.
- bwhite 17y ago
  +1 Tax filings start in a couple months, the deadline is just about 5 months away. At best this is just a very temporary stopgap. If they can't cut the budget now and can't float a bond issue now what makes them think they'll be able to do so then? "Forced, interest-free loan" is Orwellian. It's theft. Setting aside any moral considerations surrounding taxes, these words are the semantic equivalent of CA saying "We're taking your money now, like it or not, and hopefully we'll repay it in a few months." It's not a tax, it's not a fee, it's stealing and it's easy because of the whole notion of withholding. To stand against it would require that both employer and employee perform simultaneous disobedience that is sure to bring the wrath of the IRS. If we really want to see rage against taxation we'd eliminate withholding and all taxes would be rolled into a single lump sum that the taxed would have to pay the week before election day.
  - thwarted 17y ago
    How long before the state IRS auditors need to start, and then stop, accepting IOUs as payment for their work?
antonovka 17y ago
This is absolutely unacceptable. I'll be adjusting our withholding allowances to account for the change. California needs to spend less, not quietly raid my bank account.
- thaumaturgy 17y ago
  The "10% extra" figure sounds like a lot -- and from one standpoint it is -- but later in the article it mentions that this amounts to an extra $20/month for a $50K/yr earner. So while I'm not a fan of "quiet" tax levies like this, and while I'm not under the illusion that taxes, once raised, are ever really substantially lowered, and while I'm skeptical enough not to trust that we can expect it to be promptly or fully refunded come April ... I also don't see it as a tremendous disaster. California is one of the most progressive states in the union. That progressiveness -- including some of the top public school districts in the country -- comes at a price: higher taxes. Also, it's California's own taxpayers that have driven the various ballot measures that have left California struggling. Seems somehow wrong to turn around and place all of the blame for the state's budget woes on elected officials; even if they are mostly self-serving and fairly useless, they weren't the ones that passed the requests for lots more money without thinking about how to pay for it.
  - cookiecaper 17y ago
    I don't think I get it, then. 10% of $2000 is $200. How is this 10% extra withholding if they're only taking $17/mo from someone who makes $50k? That's slightly under 1% of the average monthly pay.
    - camccann 17y ago
      Someone making $50k would be getting $4167/month before tax. If an increase of 10% on state income tax is costing them $20/month, that means they used to be paying about $200/month in state income taxes, or about 4.8%. Afterwards they'd be paying $220, or about 5.3%. Looking briefly at California's income tax brackets those percentages seem to be about right.
noelchurchill 17y ago
Damnit.
Sam_Odio 17y ago
I don't understand how one of the largest states, which can supposedly benefit best from economies of scale, with one of the highest tax rates, can have such serious liquidity problems.
- cvg 17y ago
  The problem is that economies of scale generally apply in large Democratic states. Economies of scale are by their nature commercial. The only item that seems scales in CA is subterfuge.
- camccann 17y ago
  Because in California budgetary politics, one party insists on raising taxes to meet expenditures while the other party insists on cutting expenses to meet revenues, and in the true spirit of compromise the only thing they can agree on is doing neither, which ends up being the worst possible choice. At this point they should probably be doing both.
  - uuilly 17y ago
    While I agree with your sentiment on the ineptitude of our politicians, what actually happened was somewhat different. We as voters passed a bunch of propositions that increased spending while limiting the government's ability to tax. If our politicians are to be blamed, it is for not howling loudly that we have tied their hands. Most of the blame falls on us citizens who went along with a system that doesn't work. Direct democracy is a cute thought, but in practice it spreads the responsibility too thin and fatally hampers a leader's ability to maneuver or veto obviously contradictory measures. Perhaps now would be a good time to unwind this mess.
    - aaronblohowiak 17y ago
      We need to raise property taxes and only exempt the seniors!
    - miked 17y ago
      Direct democracy works exceptionally well in Switzerland, and the citizens vote four times a year there. Time to state the obvious: the Dems have controlled both houses of the state legislature for decades, and they shovel money to the state employee unions in exchange for block voting. And it works. Then there are all the regulations they pass that make CA the worst rated place in the US to do business, driving businesses and their tax money from the state.
electromagnetic 17y ago
This just sounds like an employer with a gambling problem, he's taking cuts off his workers paychecks and claiming they'll get paid out. Well one question; what happens when he hits rock bottom and loses the business?
camccann 17y ago
As ridiculous as the whole idea is, it's almost as absurd to imagine this being some terrible hardship. The article makes it sound like it'll be a big deal to a lot of people but it's, what, maybe $30/month for someone with a pretty comfortable income? If that's a serious concern, then it's not just the state government with a budgeting problem... Then again, maybe the purpose is just to get Californians upset to distract them from noticing that noone's actually solving the problem.
- algorias 17y ago
  Yes, it's just a fraction of a percent. The ratio goes up if you count disposable income only, but I can't imagine it being such a big deal.
philk 17y ago
Given how heavily the Californian budget process is constrained I'm not sure they had any better options. Hopefully this can serve as an added impetus to finally reforming the broken budgeting system there.

27 points by absconditus 17y ago

fnid 17y ago

Think of it as a forced, interest-free loan: You'll be repaid any extra withholding in April. Yeah, sure. They are already paying their debts with IOU's. They didn't pay people's refunds last year, was it? This seems pretty wrong to me. Are they going to repay it with another loan? Who is going to loan them money? The only way out of the debt spiral is to stop spending, not taking on more debt.

slpsys 17y ago
They gave IOUs for refunds, then paid them fairly quickly. I filed mine electronically on April 10th or so, and received my refund within a few weeks--it's not like they just didn't pay. I don't disagree on the whole, though.
bwhite 17y ago
+1 Tax filings start in a couple months, the deadline is just about 5 months away. At best this is just a very temporary stopgap. If they can't cut the budget now and can't float a bond issue now what makes them think they'll be able to do so then? "Forced, interest-free loan" is Orwellian. It's theft. Setting aside any moral considerations surrounding taxes, these words are the semantic equivalent of CA saying "We're taking your money now, like it or not, and hopefully we'll repay it in a few months." It's not a tax, it's not a fee, it's stealing and it's easy because of the whole notion of withholding. To stand against it would require that both employer and employee perform simultaneous disobedience that is sure to bring the wrath of the IRS. If we really want to see rage against taxation we'd eliminate withholding and all taxes would be rolled into a single lump sum that the taxed would have to pay the week before election day.
- thwarted 17y ago
  How long before the state IRS auditors need to start, and then stop, accepting IOUs as payment for their work?

antonovka 17y ago

This is absolutely unacceptable. I'll be adjusting our withholding allowances to account for the change. California needs to spend less, not quietly raid my bank account.

thaumaturgy 17y ago
The "10% extra" figure sounds like a lot -- and from one standpoint it is -- but later in the article it mentions that this amounts to an extra $20/month for a $50K/yr earner. So while I'm not a fan of "quiet" tax levies like this, and while I'm not under the illusion that taxes, once raised, are ever really substantially lowered, and while I'm skeptical enough not to trust that we can expect it to be promptly or fully refunded come April ... I also don't see it as a tremendous disaster. California is one of the most progressive states in the union. That progressiveness -- including some of the top public school districts in the country -- comes at a price: higher taxes. Also, it's California's own taxpayers that have driven the various ballot measures that have left California struggling. Seems somehow wrong to turn around and place all of the blame for the state's budget woes on elected officials; even if they are mostly self-serving and fairly useless, they weren't the ones that passed the requests for lots more money without thinking about how to pay for it.
- cookiecaper 17y ago
  I don't think I get it, then. 10% of $2000 is $200. How is this 10% extra withholding if they're only taking $17/mo from someone who makes $50k? That's slightly under 1% of the average monthly pay.
  - camccann 17y ago
    Someone making $50k would be getting $4167/month before tax. If an increase of 10% on state income tax is costing them $20/month, that means they used to be paying about $200/month in state income taxes, or about 4.8%. Afterwards they'd be paying $220, or about 5.3%. Looking briefly at California's income tax brackets those percentages seem to be about right.

noelchurchill 17y ago

Damnit.

Sam_Odio 17y ago

I don't understand how one of the largest states, which can supposedly benefit best from economies of scale, with one of the highest tax rates, can have such serious liquidity problems.

cvg 17y ago
The problem is that economies of scale generally apply in large Democratic states. Economies of scale are by their nature commercial. The only item that seems scales in CA is subterfuge.
camccann 17y ago
Because in California budgetary politics, one party insists on raising taxes to meet expenditures while the other party insists on cutting expenses to meet revenues, and in the true spirit of compromise the only thing they can agree on is doing neither, which ends up being the worst possible choice. At this point they should probably be doing both.
- uuilly 17y ago
  While I agree with your sentiment on the ineptitude of our politicians, what actually happened was somewhat different. We as voters passed a bunch of propositions that increased spending while limiting the government's ability to tax. If our politicians are to be blamed, it is for not howling loudly that we have tied their hands. Most of the blame falls on us citizens who went along with a system that doesn't work. Direct democracy is a cute thought, but in practice it spreads the responsibility too thin and fatally hampers a leader's ability to maneuver or veto obviously contradictory measures. Perhaps now would be a good time to unwind this mess.
  - aaronblohowiak 17y ago
    We need to raise property taxes and only exempt the seniors!
  - miked 17y ago
    Direct democracy works exceptionally well in Switzerland, and the citizens vote four times a year there. Time to state the obvious: the Dems have controlled both houses of the state legislature for decades, and they shovel money to the state employee unions in exchange for block voting. And it works. Then there are all the regulations they pass that make CA the worst rated place in the US to do business, driving businesses and their tax money from the state.

electromagnetic 17y ago

This just sounds like an employer with a gambling problem, he's taking cuts off his workers paychecks and claiming they'll get paid out. Well one question; what happens when he hits rock bottom and loses the business?

camccann 17y ago

As ridiculous as the whole idea is, it's almost as absurd to imagine this being some terrible hardship. The article makes it sound like it'll be a big deal to a lot of people but it's, what, maybe $30/month for someone with a pretty comfortable income? If that's a serious concern, then it's not just the state government with a budgeting problem... Then again, maybe the purpose is just to get Californians upset to distract them from noticing that noone's actually solving the problem.

algorias 17y ago
Yes, it's just a fraction of a percent. The ratio goes up if you count disposable income only, but I can't imagine it being such a big deal.

philk 17y ago

Given how heavily the Californian budget process is constrained I'm not sure they had any better options. Hopefully this can serve as an added impetus to finally reforming the broken budgeting system there.