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In another thread I had posted a comment that one of Meg Whitman's proposed major changes for California is to exclude capital gains income from future taxation. This means that gains from the sale of items such as stocks or mutual funds (bonds can be sold with capital gains) would no longer be subject to the California income tax.
During the past decade, the annual California revenue from capital gains tax alone ranged from $3 to almost $12 billion per year.
Here are some brief comments from the Sacramento Bee:
Republican gubernatorial candidate Meg Whitman wants to eliminate California's tax on capital gains.
Some tax experts say such proposals serve largely to reduce taxes for the state's wealthiest individuals...who generate a greater share of their income from stocks, mutual funds and private equity investments. They warn that a capital gains tax cut would worsen the budget deficit outlook.
Capital gains tax cuts turns into issue in governor's race - Sacramento Politics - California Politics | Sacramento Bee (http://www.sacbee.com/2010/04/19/2688057/capital-gains-tax-cuts-turns-into.html - broken link)
The California Legislative Analyst's Office discusses the wild historical swings in capital gains revenue, and the difficulty in making forecast due to these swings:
The “wild card” of this forecast is our projection of capital gains income. Capital gains are both notoriously volatile and concentrated among the highest income taxpayers (who pay the highest average tax rates). Figure 11 shows capital gains as a proportion of personal income. As the figure illustrates, the swings in capital gain realizations are substantial, resulting in multibillion reductions in PIT revenues when a recession strikes.
So here is the question, do you believe that California should stop taxing capital gains income?
The pro side here is that eliminating this tax impacts the wealthiest folks, with the assumption that they would be more inclined to stay in California and create jobs. The growth would create new revenue that would more than offset the loss of income from excluding capital gains from taxes.
The down side here is that we treat income from work as taxable, while excluding the major source of income for our wealthiest citizens, so this can be viewed as unfair.
Great Idea but wont happen in the United Socialist Government of California. Too many suckling pigs attached to the tit of people who create the wealth in this state. You have business entrepreneurs such as myself who got tired of paying capitol gains taxes. I got sick of seeing the efforts of my hard work being sucked down like a drunk on a binge by over paid and bloated government workers unions. Not to mention all the illegal aliens siphoning away my hard earned tax dollars. I fired all thirty of my employees and now only make enough to never show capitol gains. For ten years I was stupid enough to believe if I worked smarter and harder growing my business to provide great services for the public and livable wages for my employees it would pay off. The only people it paid off for were the bottom feeders of our society. Now I keep it small enough to avoid capitol gains while providing the same income to my family. Total money lost to California $150,000+ in tax revenue per year. Hopefully people like me can break this beast sending illegals back to Mexico and bleed the CALPERS coffers dry. Time for a mini revolution
Hopefully this stupid state will wake up and look at what other states are doing that have turned their economies around. I am ready to put my business model back into place if things change. If not no big deal I'll be retiring out of state in about twenty five years taking my sizable retirement nest egg with me.
CA isn't having trouble with keeping it's upper class residents, it's having trouble keeping it's middle class residents. if your household income is under $100k, the term capital gain is probably not even in your vocabulary.
I would vote to eliminat capital gains as well. Why is it that people want to soak the rich all the time? The rich allready pay their fair share and then some in taxes. A small percentage of people pay a majority of the taxes.
The problem is that most people don't know the difference in the terms working class, lower,middle, upper class and rich. Rich people don't give a crap about taxes they will shuffle investments, companies, organizations or whatever to avoid paying them. Small business owners who have their entire lives assets wrapped up into their business can't do that. So we have to try and minimize as much profit as we can because making a profit means your a mark for all the suckling pigs in our society.
Great Idea but wont happen in the United Socialist Government of California. Too many suckling pigs attached to the tit of people who create the wealth in this state. You have business entrepreneurs such as myself who got tired of paying capitol gains taxes. I got sick of seeing the efforts of my hard work being sucked down like a drunk on a binge by over paid and bloated government workers unions. Not to mention all the illegal aliens siphoning away my hard earned tax dollars. I fired all thirty of my employees and now only make enough to never show capitol gains. For ten years I was stupid enough to believe if I worked smarter and harder growing my business to provide great services for the public and livable wages for my employees it would pay off. The only people it paid off for were the bottom feeders of our society. Now I keep it small enough to avoid capitol gains while providing the same income to my family. Total money lost to California $150,000+ in tax revenue per year. Hopefully people like me can break this beast sending illegals back to Mexico and bleed the CALPERS coffers dry. Time for a mini revolution
Hopefully this stupid state will wake up and look at what other states are doing that have turned their economies around. I am ready to put my business model back into place if things change. If not no big deal I'll be retiring out of state in about twenty five years taking my sizable retirement nest egg with me.
Not sure if the Small Business Jobs Act will personally affect your business, but it will definitely help other small companies.
Eight New Small Business Tax Cuts – Effective Today, Providing Immediate Incentives to Invest: The President had already signed into law eight small business tax cuts, and on Monday, he is signing into law another eight new tax cuts that go into effect immediately.
Zero Taxes on Capital Gains from Key Small Business Investments:Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes. The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision called for by the President – elimination of all capital gains taxes on these investments if held for five years. Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments:The bill increases for 2010 and 2011 the amount of investments that businesses would be eligible to immediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year. This provision means that 4.5 million small businesses and individuals will be able to make new business investments today and know that they will earn a larger break on their taxes for this year.
Extension of 50% Bonus Depreciation:The bill extends – as the President proposed in his budget – a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investmentstoday and know they can receive a tax cut for this year by accelerating the rate at which they deduct capital expenditures.
A New Deduction of Health Insurance Costs for Self-Employed:The bill allows 2 million self-employed to know that on their taxes for this year, they can get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
Tax Relief and Simplification for Cell Phone Deductions:The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation – making it easier for virtually every small business in America to receive deductions that they are entitled to, beginning on their taxes for this year.
An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses:The bill temporarily increases the amount of start-up expenditures entrepreneurs can deductfrom their taxesfor this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures), offering an immediate incentive for someone with a new business idea to invest in starting up a new small business today.
A Five-Year Carryback Of General Business Credits:The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes – providing them with a break on their taxes for this year – while also allowing these credits to offset the Alternative Minimum Tax, reducing taxes for these small businesses.
Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business:The bill would change, beginning this year, the penalty for failing to report certain tax transactions from a fixed dollar amount – which was criticized for imposing a disproportionately large penalty on small businesses in certain circumstances – to a percentage of the tax benefits from the transaction.
The devil is always in the details. They provide a nice overview of their plan with lots of platitudes and sweeping generalizations. I cant even plan for taxes next year until This frigging congress tells me what my tax rate is going to be. This bill means nothing If I don't have a base line to work from. Should I buy that $100,000 piece of equipment or not? I have three different tax scenarios running right now just for next year. I need to plan for 3 to 5 years to actually work the numbers correctly. Should I buy that new trencher this year or next year or keep renting because of the categorization of expenditures. This is why the frigging economy is sucking right now. No one can make a frigging decision so everyone including me holds close to the vest. Not to mention how this affects my customers who are deciding on spending money of certain projects. That has a huge impact on my cash flow. Not to even mention if Jerry Brown gets elected before the feds decide on the tax rates. I fired three of my last five employees last month and turned down three contracts just because I needed a larger cash reserve. See how this crap works now!!
So we want Steve Jobs to pay nothing at all in taxes now? Because he only earns a $1 salary from Apple. The rest of his income is all taxed at the capital gains rate, which is better than nothing.
So we want Steve Jobs to pay nothing at all in taxes now? Because he only earns a $1 salary from Apple. The rest of his income is all taxed at the capital gains rate, which is better than nothing.
That is one of the issues folks can consider, executives at corporations can have much of their compensation in stock options, which are taxed at the capital gains rates.
Despite the popular perception....California loses very few jobs to other states due to high taxes or regulation.
The non-partisan Public Policy Institute of California (PPIC) did an analysis last year which showed the actual jobs lost to relocation to other states is approx. 11,000 per year. That is about .06 percent of the state's 18 million jobs.
The high cost of housing (even after the housing bust) is far bigger constraint than high taxes and regulations.
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