And that is what they are doing:
Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners -- holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.
Technically, it's not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers' annual tax bills won't change.
Think of it as a forced, interest-free loan: You'll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.
Just so we're all clear...you're going to take more than what I rightfully owe as determined under state law based on my W-4 witholdings and you're going to 'apply' it in some sort of accounting gimmick to make your bad financial situation look only slightly worse? Why, yes: The extra withholding may seem like a small amount siphoned from each paycheck, but it adds up to a $1.7-billion fix for California's deficit-riddled books.
And the timing couldn't be better: Brittney McKaig, 23, of Santa Ana said she expects the additional withholding to affect her holiday spending.
"Coming into the holidays, we're getting squeezed anyway," she said. "We're not getting Christmas bonuses and other perks we used to get. So it all falls back on spending. The $40 gift will become a $20 gift."
As a small business owner, I'm especially looking forward to that...not enough when you're in a state that is performing worse than the national economy and a community that is performing even worse than the state. And when you add this on top of the sales tax increase (1%) earlier in the year, I'd say the state has bent over backwards to make life as difficult as possible for small businesses, especially in retail.
Veronique de Rugy noticed this earlier today over at the Corner and asked a question that I screamed out at the computer on Saturday when I first read this; namely, is this legal? She posted a reader response later in the day from, I can only presume, somebody with at least a quasi-legal background:
This is a gray area, and if the right paintiff emerges (probably a large private-sector union local) then it could go to the U.S. Supreme Court. My guess is that there are plenty of justices who would not be readily convinced regarding the coincidence of a state cash-flow crisis and the "discovery" of a need to boost a formula developed to be reasonably related to what taxpayers should owe.
This is just another piece in a mosaic of idiocy that has been sewn together over the last 10 years in Sacramento. If it weren't going to do so much damage to so many people (including my family), I would just sit back and laugh as this state collapses under the weight of it's own idiocy. But it will damage too many far too much by the time all is said and done for that.
As to what to do...I'm sure I don't know. In any just world we'd show up in Sacramento with the torches & pitchforks and pound some sense into their heads.
Wednesday, November 04, 2009
And that is what they are doing: