Increased Income Tax Revenues

[yeahthatguy]

Originally Posted by DowntownVentura

OK, I know you are the financial expert, because you said so and all.......


Are Payroll Taxes (aka FICA) deductible? If they are not deductible, is this whole argument meaningless?

I dont think FICA is deductible in CA .. so majority of my argument is invalid ... Thanks for pointing this out.

Not a tax expert but the changes are below ...

Factual Paycheck example

(2011 w/ fica cut)
Federal income tax paid : $473.64
Fica paid : $150.26
federal medicare : $51.87
California income tax : $172.47
CAlif vol disability : $42.91

(2010 w/o fica cut)
Federal income tax paid : $450.45
Fica paid : $218.98
federal medicare : $51.22
California income tax : $176.47
Calif vol disability : $27.20

[DowntownVentura]

Originally Posted by yeahthatguy

I dont think FICA is deductible in CA .. so majority of my argument is invalid ... Thanks for pointing this out.

Not a tax expert but the changes are below ...

Factual Paycheck example

(2011 w/ fica cut)
Federal income tax paid : $473.64
Fica paid : $150.26
federal medicare : $51.87
California income tax : $172.47
CAlif vol disability : $42.91

(2010 w/o fica cut)
Federal income tax paid : $450.45
Fica paid : $218.98
federal medicare : $51.22
California income tax : $176.47
Calif vol disability : $27.20

So where are we guy, is the increased California income tax a good thing for the state? No sleight of hand?

[sunnykiol]

California doesn't tax unemployment benefits, if that's what you were saying.

[yeahthatguy]

Originally Posted by DowntownVentura

So where are we guy, is the increased California income tax a good thing for the state? No sleight of hand?

? We are at a point where California is getting more tax revenue due to short changing social security ...

-> sales tax (more money is avail now to be spent)
-> increased revenue to California voluntary disability to cover the unemployment handouts... which get spent and thus sales tax revenue increases....

Unemployment handouts are not taxed in california ...
and they have nearly doubled the amount taken out of the example paycheck to help fund them...

In 2010, in the example check :
California income tax : $176.47
Calif vol disability : $27.20
----
California paycheck cut : $203.67

In 2011, in the example check :
California income tax : $172.47
CAlif vol disability : $42.91
---- California paycheck cut : $215.38


$11.71 per bi-week paycheck increase in tax revenue ...
$304.46 more in tax revenue per year for California in this example case...
Assuming an effective tax rate of 9% .. that's the equivalent of 9% tax on an extra $3382.88 worth of income ...

So yes, California's tax revenue just increased via the backdoor (not even getting into the extra sales tax that will result from extra money on hand)
It's not a good thing.. The federal govt. just cut funds to social security which is critically underfunded in order to provide more tax revenue/money now.. Many states used the extra income people will see as an excuse to quietly bump certain taxes to take advantage of it .. It's short term gain for long term pain.. Something California is quite familiar w/ and the federal govt. .. Your average person doesn't think long term nor care ... So, this sleight of hand is done quite often... You have no better job situation and increased tax revenue... that should lead you to hunt for how this could happen...

[DowntownVentura]

Originally Posted by yeahthatguy

? We are at a point where California is getting more tax revenue due to short changing social security ...

-> sales tax (more money is avail now to be spent)
-> increased revenue to California voluntary disability to cover the unemployment handouts... which get spent and thus sales tax revenue increases....

Unemployment handouts are not taxed in california ...
and they have nearly doubled the amount taken out of the example paycheck to help fund them...

In 2010, in the example check :
California income tax : $176.47
Calif vol disability : $27.20
----
California paycheck cut : $203.67

In 2011, in the example check :
California income tax : $172.47
CAlif vol disability : $42.91
---- California paycheck cut : $215.38


$11.71 per bi-week paycheck increase in tax revenue ...
$304.46 more in tax revenue per year for California in this example case...
Assuming an effective tax rate of 9% .. that's the equivalent of 9% tax on an extra $3382.88 worth of income ...

So yes, California's tax revenue just increased via the backdoor (not even getting into the extra sales tax that will result from extra money on hand)
It's not a good thing.. The federal govt. just cut funds to social security which is critically underfunded in order to provide more tax revenue/money now.. Many states used the extra income people will see as an excuse to quietly bump certain taxes to take advantage of it .. It's short term gain for long term pain.. Something California is quite familiar w/ and the federal govt. .. Your average person doesn't think long term nor care ... So, this sleight of hand is done quite often... You have no better job situation and increased tax revenue... that should lead you to hunt for how this could happen...

No, that is disability insurance, not state revenue. The fact that it says 'Vol' (Voluntary) means it isn't even using the state disability insurance, it is a private disability insurance or self-insured disability. They must still use the state rates. But it has nothing to do with state income tax revenue, in other words, the $2B extra money is not from increased disability insurance.

let me summarize

California receives $2B more in tax revenue than forecast

Try#1
[yeah that guy] That is because the extra tax on unemployment payouts
No, the state does not tax unemployment payouts

Try#2
[yeah that guy] That is because with the reduction of payroll taxes, there is more income for California to tax.
No, payroll tax is not state (or federal) deductible. The taxable income is the same no matter how much was taken out for payroll tax

Try#3
[yeah that guy]That is because the extra disability insurance deductions
No, this is not part of the state income tax revenue

Anything else?

[yeahthatguy]

Originally Posted by DowntownVentura

No, that is disability insurance, not state revenue. The fact that it says 'Vol' (Voluntary) means it isn't even using the state disability insurance, it is a private disability insurance or self-insured disability. They must still use the state rates. But it has nothing to do with state income tax revenue, in other words, the $2B extra money is not from increased disability insurance.

let me summarize

California receives $2B more in tax revenue than forecast

Try#1
[yeah that guy] That is because the extra tax on unemployment payouts
No, the state does not tax unemployment payouts

Try#2
[yeah that guy] That is because with the reduction of payroll taxes, there is more income for California to tax.
No, payroll tax is not state (or federal) deductible. The taxable income is the same no matter how much was taken out for payroll tax

Try#3
[yeah that guy]That is because the extra disability insurance deductions
No, this is not part of the state income tax revenue

Anything else?

Thanks for clearing that up. I learned a lot over this thread. Was wrong on many assumptions.
Digging in further :
http://www.sco.ca.gov/april_2011_per...x_tracker.html
http://blogs.kqed.org/capitalnotes/2...llars-come-in/

Seems the boost came 2 days before the income tax deadline....
Personally, I paid out lump sums to federal/state around this time due to fluctuations in non-earned income... Stocks markets have been doing great (I don't expect this to last much longer) ... Employee stock purchase plan has been doing great ... IPOs have been booming... options have been exercised at numerous companies now that they are no longer underwater....

I look at unemployment which is still high ...
Look at stagnant wages .....
Beging to try to understand why personal income tax revenue is up.