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THE
CALIFORNIA SIMPLE TAX
Economic
Impact on Married Taxpayers
The
Franchise Tax Board reports that 73 percent of California
Married Taxpayers (filing jointly) earn less than our $100,000
income limit and would therefore qualify to use our optional
plan. So how would our plan affect their taxes?
During
the 1996 presidential primary election the Orange County
Register examined the taxes paid under current law by five
families and contrasted this with what they would have paid
under the various Flat Tax plans. We have created similar but
fictitious families to demonstrate the financial impact the
CAL Simple Tax plan might have on you or someone you know.
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A
married couple whose joint income is $49,347
Our
married couple are in their early 60's. Their
mortgage is paid off, they have no dependent children,
and they claim the standard deduction. They would pay $902
under the present Tax Code and $883 under our plan. Professional
tax preparers would typically charge them $150 or more
to file their Federal and State tax returns. Our
married couple might save up to $50 in these fees by
filing themselves using our 540-Simple tax form.
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A
married couple with one dependent, whose joint income
is $78,000
Our
family of three owns their home and has one teen-age
daughter. Their itemized tax deductions consist of
mortgage interest and property tax which total
$15,000. Under the present Tax Code they would owe
$1826, while under our plan they would only owe $1598 and
save $228 in state taxes. Professional tax
preparers would typically charge this family $300 or
more to file their Federal and State tax returns. They
might save an additional $100 in these fees by filing
themselves using our 540-Simple tax form. |
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A
married couple with two dependents, whose joint income
is $98,695
Our
second family of four own their own home, have a teen-age son and college age daughter, and claim $26,113 in
itemized deductions. Under the current Tax Code they
would pay a state tax of $2390, while under our plan
they would owe $2116. The California Simple Tax would
save this family $274. Professional tax preparers
would typically charge them $300 to file their Federal
and State tax returns. Our family might save an
additional $100 in these fees by filing themselves using our 540-Simple tax form. |
In
summary, our plan distributes the tax burden evenly and fairly
based on total income, not how that income is spent or the age
of the taxpayer or how many children are in the family.
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Under
our plan, the tax burden in the examples above as a
percentage of income was 1.79%, 2.05%, and 2.14%.
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Under
the present California tax code, the tax burden in the
examples above as a percentage of income was 1.83%, 2.34%,
and 2.42%.
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marginal tax rate under our plan is a constant 2.5% while
in the examples above the current tax code imposed
marginal tax rates of 4, 6, and 8 percent.
The
IRS estimates that the time required by taxpayers to collect
the necessary records, study, prepare, and submit a 1040 Form
at 15 to 25 hours. The California 540 Form is not a lot
simpler. We expect, however, that you will find the time it
takes you to prepare our Form 540-Simple will be measured
in minutes rather than hours.
We
hope that you will be pleased with the tax savings you may
expect from our plan as well as the savings both in time and
record keeping. You may also save money you have previously
given to a professional tax preparer as well.
TRY
THIS!
Once
you've computed your new "Simple Tax" with our proposed
Form 540-Simple, compare the result to what you paid
in state taxes in 2002. Be sure to include the cost of a
professional tax preparer if you used one.
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