Q:
Why is it important to do this ??
A:
The cost of tax compliance to the taxpayer is very real both
in time wasted as well as in the expense of professional tax
preparers. This cost of compliance is a total waste of
taxpayer dollars and is growing every year. For the most part
this expense is unnecessary; for example over 60 percent of
California Taxpayers claim only the standard deduction yet
most of them are forced to slog through the 63 pages
instructions of the CA 540 Tax Form. Our Plan would remove
this burden for three out of four California Taxpayers. The
state would also save on the expense of printing from 7 to 10
million unnecessary 63 page 540 tax booklets and the cost to
examine the complex tax returns they produce.
Q:
Why An Initiative ??
A:
The legislature has been in gridlock for the past year. We
chose the initiative process as a way to get the issue before
the people of California. The initiative process is a difficult
and costly process, but it is nothing in comparison to the torture
test most taxpayers are put through every April 15th by both
the IRS and the Franchise Tax Board.
Q:
Why should I support this if I earn more than $50,000 or
$100,000 ??
A:
There is no question that you are overtaxed and deserve
relief. The implementation of our simple tax plan will give us
the the platform to point out the absurdity of maintaining a
punishing 9.3 percent tax rate for honest taxpayers while
continuing to maintain loopholes which give away nearly 1/2 of
the revenue collected by the California Personal Income Tax. Be
assured that we will continue to lobby to reduced your tax
rates as well.
Q:
Is it really that simple ??
A:
Yes it really is. Remember the Social Security
administration collects more from California workers than the
State does. When is the last time you filled out an annual tax
report to SSI ?? You never did - such a form does not even
exist. They simply withhold the proper amount from your
earnings in the first place.
Q:
Besides simplicity are there any other benefits ??
A:
Record keeping is greatly reduced along with all the headaches
that entails. The information you need are Form W2 from your
employer and Federal Forms 1099 from your financial
institutions and brokers. Since all the required information
will be supplied to the tax authorities by your employer and
your financial institutions there will be no need to audit
your personal records.
Q:
What would be the Impact on California Tax Revenue ??
A:
The State financial analysts estimate that our plan will
produce a revenue loss of $900 million the first year and $700
million thereafter. This analysis assumed that taxpayers would
give no value to simplification and would choose whichever tax
code resulted if the lowest tax. It is quite possible,
however, that many taxpayers who now itemize will value
simplification and choose our simple tax even though it may
raise their taxes slightly. In this case the revenue loss
would be significantly reduced. [Please see our Economic
Impact on California Tax Revenue section for more
detailed data.]
Q:
Why is the Projected Revenue loss so small ??
A:
There are so many loopholes and tax credits in our California
tax code that the actual tax collected from all married
taxpayers earning up to $100,000 and all single taxpayers
earning up to $50,000 is less than 2% of this group's personal
income. This may be hard to believe with tax rates in effect
for this group of up to 9.3 percent . Yet it is true
nevertheless. If we were to replace all these tax brackets
with a single 2.5% rate and allow only the current standard
deduction, there would be no revenue loss. Our Plan increases
the current standard deduction of $3004 for single filers and
$6008 for married filers, to $7020 for single filers and
$14,040 for married filers - causing a modest revenue loss.
Q:
What About the fiscal effects of reducing revenue by $900
million ??
A:
The legislature has increased your CAR TAX by almost five
time this amount. Meanwhile the California Finance Department
has identified over 20 billion dollars in tax loopholes.
Eliminating 5 percent of these loopholes would more than pay
for our tax plan. The Real question is why 1 percent of STATE
SPENDING can't be cut. [Please see our Economic
Impact on California Tax Revenue section for more
detailed data.]
Q:
Does this have any effect on your Federal Tax ??
A:
If you file your Federal return using the Standard Deduction
there will be no effect whatsoever. Overall
our plan can be expected to have a negligible effect on the
nearly one trillion dollars collected by the Federal personal income
tax.
