In case you missed It: Californians' withholding taxes are going up by 10 percent
Taxes: For most, they get taken out each paycheck, allocated to their respective governmental level and then dispersed as funding for a given government program. Typically handled by a payroll department, the taxes are taken swiftly and stealthily, leaving taxpayers with a pay stub reflecting the difference between wages earned and wages taken home.
Already Californians are among the most taxed individuals in the nation -- and now, thanks to a sneaky trick included in the July budget, expect to see even more taken out of your paycheck. And this time, it's without your consent.
For those who followed the July budget negotiations closely, there technically were no tax increases as part of balancing the budget. There were, however, many one-time gimmicks that are just as unacceptable.
Among them is AB 17 XXXX (so designated because it was presented in the fourth extraordinary legislative session), the provisions of which provide for a change to what is known as the personal tax liability withholding -- or, in other words, how much of your personal income is withheld by the state in a given year. The Franchise Tax Board (FTB) is the agency responsible for wage withholdings in California and this bill instructs them to adjust the percentage of personal income withheld to an amount that is equal to 10 percent greater than it is now.
For example: if you owed the state $1,000 last year then the FTB claimed that much from your paycheck. This year, however, beginning Nov. 1, if you owe the state $1,000, the tax man will be taking $1,100 from you over the course of the year -- a net increase of 10 percent in your personal income tax.
How?! Why?! What?! All reasonable questions with less than reasonable answers.
By simply adjusting existing percentages, the state will now be taking more out of your paycheck than you owe, knowing full well that this money does not belong to anyone but you. This, in turn, gives the state a one-time boost in revenues to offset the state's persisting deficit. It is expected that this tax trickery will net the state nearly $1.7 billion next year. This is an unfair, clandestine move that hurts working families and taxpaying Californians. And, because it wasn't technically a tax increase, it only needed a simple majority to pass.
Thankfully, there are ways to avoid this tax, or to recover the money. Two options exist. Taxpayers can simply do nothing, allow the state to claim more of your money than they should, and then wait to recoup it in the form of a refund when you file your taxes. The state will inevitably owe the money back to taxpayers and this avenue relies on the FTB to self-correct their own bad policy.
Some deem this too risky and perhaps not foolproof. If the state is willing to knowingly and incorrectly overtax its residents, why then would it be willing to admit fault and cut a refund check?
Thankfully, there is a second fix. By contacting your payroll department or other similar entity, you can request that they adjust down your current withholdings starting when the new higher state withholding percentage begins. This will cause the amount owed and amount withheld to basically even out and effectively avoid the 10 percent hike. AB 17 XXXX causes a permanent change in the tax structure, meaning Californians who do not adjust their withholdings will be overpaying by 10 percent each year going forward.
This bill is a glimpse into how the legislature "balanced" the budget in July. I voted against this and many other shell-game maneuvers that were used to close our multi-billion dollar budget gap. Instead of dealing in reality, the liberal majority of legislators chose to force Californians to shoulder the burden once again. So, while Californians face layoffs, wage reductions, fewer jobs and furloughs, the legislature chooses to withhold more of your hard-earned money each paycheck with an unjust tax scheme. This is inexcusable and sadly, it's par for the course in Sacramento.
Danny Gilmore, R-Hanford, represents the 30th Assembly district.
