The
California Simple tax plan creates an alternative to the
current tax code and forms. It provides taxpayers the choice
of selecting a simple, easy to use, tax form featuring a
reduced tax rate of 2.5% and a generous Standard Deduction.
Our
Plan builds on Tax Form 540-2EZ introduced in 1999. This post
card sized tax form initially retained the $400 limit on
Interest income established by the IRS on form 1040EZ. It also
did not allow any income from dividends or pensions nor did it
allow use by Seniors over 65. Through extensive lobbying
efforts we were able to have the limits removed on interest
Income and age.
In
our Initiative
we now further propose that earnings from Dividends, IRA
distributions, and Pensions be allowed. In addition our
initiative more than doubles the Standard Deduction to $7020
for single taxpayer and $14040 for married taxpayers filing
jointly and replaces the existing six tax rates with a single
rate of 2.5 percent. Filing your taxes will be as simple as
one, two, three. Just add up your income, subtract the standard
deduction and multiply by 0.025.
Taxpayers
who wish to continue to itemized their deductions and claim
tax credits and exemptions, with all the effort and expense
as well as the headaches of the accompanying record keeping can
continue to do so by using the current tax code and CA
540 tax forms.
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Title
and Summary of the proposed Measure
The
Attorney General Of California has prepared the
following title and summary of the chief purpose and
points of the proposed measure.
ALTERNATIVE
INCOME TAX RATE, INITIATIVE STATUTE
Amends
California’s income tax law to provide an alternative
standard deduction and tax rate for taxpayers with
adjusted gross income for the taxable year of $50,000 or
less for individuals, and $100,000 or less for married
couples filing jointly.
Qualifying
taxpayers may choose to take a deduction equal to
California's minimum wage effective for the taxable
year, multiplied by 1,040 for individuals, or multiplied
by 2080 for married couples filing jointly, and pay 2.5%
tax on the adjusted amount. Directs the Franchise Tax
Board to prepare a form for use by taxpayers. Summary of
estimate by Legislative Analyst and Director of Finance
of fiscal impact on state and local governments: The
measure would have the following major fiscal effects:
Reduction in state income tax revenues of approximately
$900 million in 2004-05 and $700 million annually
thereafter.
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PRINTER-FRIENDLY
COPY OF INITIATIVE:
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