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Old 09-29-2009, 10:30 AM
 
Location: Sacramento
13,477 posts, read 16,403,651 times
Reputation: 5319

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...the commission recommends a simpler system with just two rates: 2.75 percent for individuals making up to $28,000 a year and couples making $56,000, and 6.5 percent for those who make more.

If the Legislature adopted the commission's recommendation, joint filers would have a standard deduction of $45,000, or $22,500 for single filers, much higher than the current rates. The practical effect of that means joint filers who make up to $101,000 would still be taxed at the 2.75 percent rate.

Everyone else above that would be taxed at 6.5 percent.



Panel To Push Flat Income Tax, Repeal Of Sales Tax - cbs13.com (http://cbs13.com/local/tax.panel.recommendation.2.1215245.html - broken link)


Proposal also contains a "value added" tax to replace the current sales tax.

I need to see the details, but on the surface I like the proposal.
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Old 09-29-2009, 05:38 PM
 
1,687 posts, read 3,804,876 times
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Looks like its already taking fire from both sides. Of course, this is California. We can't even get members of one side to support a change.

"The proposals came under immediate fire from labor unions and business groups who hold considerable sway in the Legislature, as well as Democratic-appointed commissioners and a group of tax law professors and think-tank analysts. Business groups say the plan could have significant unintended consequences and would damage companies that rely heavily on labor rather than materials. Labor groups say that because businesses cannot deduct employee benefits and wages, workers will bear the brunt of the new Business Net Receipts Tax."


The basic details are:

"-- Flatten the state's income tax by reducing the number of brackets from six to two and capping the top rate at 6.5 percent. Millionaires would still pay an additional 1 percent on income above $1 million for mental health programs.
-- Install a new form of tax on all businesses that applies to their net revenues minus purchases from other firms, dubbed the Business Net Receipts Tax. Companies would not be able to exempt wages and benefits for in-house employees, although they could exempt any payments to contractors. The rate would top out at around 4 percent, less than half of the existing corporate tax.
-- Eliminate the 5 percent state sales tax portion that goes toward the general fund.
-- Eliminate the state corporate tax.
-- Establish a new independent tax forum to resolve tax disputes.
-- Ask voters to establish a new rainy-day fund and spending cap."

Schwarzenegger lauds new tax plan as business, labor groups denounce it - Sacramento News - Local and Breaking Sacramento News | Sacramento Bee (http://www.sacbee.com/topstories/story/2218371.html - broken link)
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Old 09-29-2009, 05:43 PM
 
Location: Sacramento
13,477 posts, read 16,403,651 times
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True, the special interest have tremendous sway in this state, on both sides of the aisle.

However, I think the proposal appears to go a long way towards providing a more predictable revenue stream, and a somewhat more palatable tax rate for upper level income earners. Penalizing the wealthy is counterproductive to our long term best interest, and multiple objective analysis of California revenue discloses the wealthy pay a disproportionately high percentage of the tax bill.

I think the proposal is pretty attractive, I hope it is at least a serious consideration for public debate.

Our current process results in too great a revenue fluctuation on a yearly basis.
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Old 09-29-2009, 06:42 PM
 
1,687 posts, read 3,804,876 times
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The revenue fluctuations, particularly those caused by relying heavily on sources that have big swings like investment income, have to be eliminated.

I just hope that right now everyone is just posturing and that a final compromise can be reached.

A new plan won't please everyone but we can't continue generating state revenue using the current sources and methods. We already see that what we have now doesn't work.
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Old 09-29-2009, 06:43 PM
 
1,309 posts, read 4,001,393 times
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Amazing. I just wrote a post on California being a two-class economic society. Now here's a tax plan that provides for it: a tax tier for the wealthy and a tax tier for a blue-collar service class. Since there won't be a middle class anymore, there's no need for a middle-class tax tier.
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Old 09-29-2009, 07:11 PM
 
Location: Sacramento
13,477 posts, read 16,403,651 times
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Quote:
Originally Posted by Steve97415 View Post
Amazing. I just wrote a post on California being a two-class economic society. Now here's a tax plan that provides for it: a tax tier for the wealthy and a tax tier for a blue-collar service class. Since there won't be a middle class anymore, there's no need for a middle-class tax tier.
I disagree, when you factor in the proposed standard deductions there is a significant "0" tax bracket for moderate income earners. Standard deduction proposed is $22,500 for single filers, and $45,000 for joint filers.
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Old 09-29-2009, 08:57 PM
 
1,383 posts, read 2,069,794 times
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[quote=NewToCA;10968893]...the commission recommends a simpler system with just two rates: 2.75 percent for individuals making up to $28,000 a year and couples making $56,000, and 6.5 percent for those who make more.

I kinda like that, as a newly unemployed person of poorness, i will be way under the $56,000. California might well be the state to live in!!!
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Old 09-29-2009, 10:16 PM
 
Location: Pasadena
1,285 posts, read 1,874,307 times
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Personally I like it a lot. Tons and tons of people have evaded California taxes by "moving" to Nevada, Texas and other states and business "pretend" to not do business in California to get around the taxes.
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Old 09-29-2009, 10:19 PM
 
11,726 posts, read 24,861,085 times
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So how does a VAT work? Can I collect a reimbursement from customers like I do with sales tax? Most of my business is service which currently isn't taxed. I suspect if this goes through, I'll find myself with a lot of people offering cash for a discount.
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Old 09-29-2009, 10:33 PM
 
Location: Sacramento
13,477 posts, read 16,403,651 times
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Quote:
Originally Posted by EscapeCalifornia View Post
So how does a VAT work? Can I collect a reimbursement from customers like I do with sales tax? Most of my business is service which currently isn't taxed. I suspect if this goes through, I'll find myself with a lot of people offering cash for a discount.
From the report itself (public document, not subject to copyright protection):

The state should impose the BNRT, which would apply to all net receipts of almost all entities doing business in California. The BNRT is designed to tax the value a business adds in its production of products and services in California at a relatively low rate.

The base on which the tax is imposed is the net receipts of a business. In simple terms, net receipts is calculated first by aggregating the gross receipts, which is the gross amount the business receives from all sources, such as sale or exchange of property, performance of services or the use of property or capital in a trade or business. Next, all purchases, such as those from all other firms, are aggregated and then subtracted from gross receipts, resulting in the business’s net receipts. This is then multiplied by the BNRT rate to calculate the tax liability of the business.

In general terms, the formula for the BNRT is:

(1) Gross Receipts - Purchases from Other Firms = Net Receipts

(2) Net Receipts * BNRT Rate = BNRT Liability

According to our preliminary calculations, the BNRT rate that would achieve revenue neutrality once the tax has been fully phased in is approximately 4 percent. The Commission recommends that the BNRT rate not exceed 4 percent.



http://www.cotce.ca.gov/documents/re...nal_Report.pdf
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