As this morning's Daily Breeze reports, "Starting Sunday and lasting through Dec. 31, employers will increase state income tax withholdings from pay checks by 10 percent, in compliance with new state tax withholding tables."

But, they aver, "The question is, will you even notice?"

What do you think?

Mr. John,

The system is broke, it matters not what we/i think, the people
are made impotent to respond/act, many things are being shoved
down our throat at an alarming rate. So, what I think is a
shipwreck waiting to happen.
Best regards.

So, what I think is a
shipwreck waiting to happen.

Anyone have any thoughts on whether or not our ship of state is headed for rough seas?

John,

The "Sirens" of redistribution of wealth and something for nothing are calling our ship.  Put wax in the ears of our crew of hardwork and fair play.  Tie our Captain to the mast, so he alone can hear.

Bob   

John -

In addition to the increase in payroll withholding, beginning January 1, CA will require withholding of 7% of gross proceeds (in excess of $1500 per year) paid to non-resident landlords by property management companies. To avoid that, the property management company (not the landlord) must file Form 588 and the Franchise Tax Board must approve the waiver.

Since CA allows a credit for taxes paid on those proceeds to the landlord's home state in most cases, the typical actual tax rate on such income is less than 1%.

Kurt

> CA is either generously inclined

Not when their withholding rate is seven times the actual tax rate. Regardless, remember that the credit is based on taxes paid to the other state though; taxing the same income at ragular rates without credits by two different states would be problematic.

> figures that it has a lot more of its own residents who own out-of-state RE that it can tax consistently with that principle.

The tax calculation for non-residents is quite convoluted. I don't know if a different method would give higher returns to them or not. Withholding is a reasonable idea; lots of landlords simply will never file if they think they can get away with it. Since property taxes and transfers are all done at the county level, the state never knows about rental income. Property management companies are supposed to generate 1099's, but I've never gotten one in 25 years.

Kurt

It's not 'Uncle Sam,' but 'Uncle Arnold' Schwarzenegger who says his state needs the money more than you do right now.  So the state's going to withhold 10% more from Californians checks.  How do you think most Californians are likely to be taking this latest drain on their wallets? <<

John,

IMHO we, the people, need to take back control of our money!  There is too much delegation of our funds going on.

Bruce from Central New Jersey

>>  Cali is in next to last place when it comes to getting fed dollars back based on dollars paid to the fed....   <<

Unlike Lake Woebegon, "where all of the kids are above average," it is not possible for all of the states to reap higher than average percentages of federal grants and contract spending.

Indeed, the whole notion of sending tax dollars to Washington and expecting them to return, somehow enhanced, to their states of origin is fatuous.  After all the federal bureaucracy is bound to have a portion stuck to its fingers. Then, the balance of each state's federal tax "contribution" is going to be "up for grabs" by the other 49 states. Them ain't very good odds, 49 to 1.

Suppose that our state and local politicians [including our Congressional delegations] were to acquire some spinal fortitude, cease looking for Uncle Sam to do the tax collecting and shake the money tree in their direction, and eliminate the diminished returns of tax money sent on a round-trip to Washington. Let the pols who are spending the money in your town or your state take the responsibility for collecting the money that they wish to spend. The shorter the distance between collecting and spending, the less opportunity for leakage and "frictional" losses along the way.

Best regards,  4merCL

STRAT  >> hey, thats great, but did I say that was what I expected?????     <<

No, you did not.  But my observation was intended to highlight the invalidity of the yardstick that you did propose. That is, the percentage of federal spending and grants to a state as a percentage of the federal taxes collected there.

Consider for example the costs of operating the United States Military Academy (West Point), the Naval Academy in Annapolis, Maryland., and the Air Force Academy in Colorado Springs, Colorado. These are not barrels of pork for the communities and states where these schools are located. These are institutions educating future military officers who come from all of the states and who will be defending all of our country -- not just the states where these academies are located. Why should the federal expenditures for them be proportional to the federal taxes collected from these three states?

Do you disagree with my premise that dollars taxed locally are likely to be more efficient than those taxed by Washington, supposedly for the purpose of turning them around and sending them back to states [minus some "haircut" for shipping and handling]?

Best regards,  4merCL