Just thought you guys should know... your weekly paycheck might be a little less. Very nice of you all to loan your state government extra money. I hope they help you when you need it!
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The federal and California state tax honchos couldn't plan it this way if they tried, so forget about your conspiracy theories.
Months after Uncle Sam is well into a stimulus tax program that gives workers more of their paychecks, California has swooped in to take back that money with an accounting trick to help balance the state's budget.
On Sunday, California began withholding more from workers paychecks as part of the smoke-and-mirror math that helped close a $48 billion budget gap this year.
This is not a tax increase, Gov. Arnold Schwarzenegger will say, but rather a way to raise nearly $2 billion between now and the end of the state's fiscal year in June.
The new tax tables increase the state withholding rate by 10 percent and increase withholding on supplemental wages (i.e., bonuses and leave payouts on a final check or paid in advance of retirement, etc.) to 6.6 percent from 6 percent.
You can check what your reduction will be by looking on a recent pay stub. Find where it says "CA State Income'' and multiply that by 10 percent.
For example, if you currently have $20 withheld for state income taxes per check, you will now have $22. A single wage earner making $51,000 a year with no dependents will get about $4 less a week. A couple earning $145,000 a year with no dependents will notice a $16.90 decrease in weekly withholdings.
The attitude is different over on the other side of the tax-collecting fence, where the federal government is six months into living with less tax withholding revenue.
As part of President Barack Obama's stimulus plan to put more cash into taxpayers' hands in the most seamless way, the feds lowered income tax withholding rates in April.
The Making Work Pay credit is equal to 6.2 percent of earned income, whether it be from job wages or self-employment. It applies to 2009 and 2010.
For the individual taxpayer, the credit is worth up to $400 a year and for married couples filing joint returns, it's worth up to $800. The credit is phased out for individuals with adjusted gross incomes between $75,000 and $95,000 and for married couples with adjusted gross incomes between $150,000 and $190,000.
Most people who receive the credit have seen their paychecks grow by $15 to $20 per pay period since April.
But in the Golden State, you can kiss that goodbye. Arnold and the Legislature have effectively scooped up $2 billion Uncle Sam was trying to give us.
That's a potential $2 billion taken out of California retailers at the beginning of the biggest shopping season of the year, further stomping on any green shoots of recovery trying to survive.
You could argue that the state's tax grab is not going to make or break anybody, and that it is better than a tax increase. The higher withholding tables do not increase anyone's tax liability.
But the Governator and Legislature knew when they agreed to this accounting trick that it would weaken the federal government's stimulus plan. No matter.
The only thing that mattered to those in Sacramento was to balance a budget without raising taxes, even if it meant taking more from the paycheck of workers and dampening recovery. How's that for logic?
http://www.mercurynews.com/columns/ci_13703740
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The federal and California state tax honchos couldn't plan it this way if they tried, so forget about your conspiracy theories.
Months after Uncle Sam is well into a stimulus tax program that gives workers more of their paychecks, California has swooped in to take back that money with an accounting trick to help balance the state's budget.
On Sunday, California began withholding more from workers paychecks as part of the smoke-and-mirror math that helped close a $48 billion budget gap this year.
This is not a tax increase, Gov. Arnold Schwarzenegger will say, but rather a way to raise nearly $2 billion between now and the end of the state's fiscal year in June.
The new tax tables increase the state withholding rate by 10 percent and increase withholding on supplemental wages (i.e., bonuses and leave payouts on a final check or paid in advance of retirement, etc.) to 6.6 percent from 6 percent.
You can check what your reduction will be by looking on a recent pay stub. Find where it says "CA State Income'' and multiply that by 10 percent.
For example, if you currently have $20 withheld for state income taxes per check, you will now have $22. A single wage earner making $51,000 a year with no dependents will get about $4 less a week. A couple earning $145,000 a year with no dependents will notice a $16.90 decrease in weekly withholdings.
The attitude is different over on the other side of the tax-collecting fence, where the federal government is six months into living with less tax withholding revenue.
As part of President Barack Obama's stimulus plan to put more cash into taxpayers' hands in the most seamless way, the feds lowered income tax withholding rates in April.
The Making Work Pay credit is equal to 6.2 percent of earned income, whether it be from job wages or self-employment. It applies to 2009 and 2010.
For the individual taxpayer, the credit is worth up to $400 a year and for married couples filing joint returns, it's worth up to $800. The credit is phased out for individuals with adjusted gross incomes between $75,000 and $95,000 and for married couples with adjusted gross incomes between $150,000 and $190,000.
Most people who receive the credit have seen their paychecks grow by $15 to $20 per pay period since April.
But in the Golden State, you can kiss that goodbye. Arnold and the Legislature have effectively scooped up $2 billion Uncle Sam was trying to give us.
That's a potential $2 billion taken out of California retailers at the beginning of the biggest shopping season of the year, further stomping on any green shoots of recovery trying to survive.
You could argue that the state's tax grab is not going to make or break anybody, and that it is better than a tax increase. The higher withholding tables do not increase anyone's tax liability.
But the Governator and Legislature knew when they agreed to this accounting trick that it would weaken the federal government's stimulus plan. No matter.
The only thing that mattered to those in Sacramento was to balance a budget without raising taxes, even if it meant taking more from the paycheck of workers and dampening recovery. How's that for logic?
http://www.mercurynews.com/columns/ci_13703740
~TheDoc - ICQ7765825
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