CALIFORNIA SIMPLE TAX
Impact on Single Taxpayers
Franchise Tax Board reports that 85 percent of California
Single Taxpayers earn less than our $50,000 income limit and
would therefore qualify to use our optional plan. So how
would our plan affect their taxes?
the 1996 presidential primary election the Orange County
Register examined the taxes paid under current law by five
families and contrasted this with what they would have paid
under the various Flat Tax plans. We have created similar but
fictitious families to demonstrate the financial impact the
CAL Simple Tax plan might have on you or someone you know.
young, single worker whose income is $22,880
hypothetical worked earns $11.00 per hour, rents, and
claims the standard deduction. Under the current Tax
Code he would pay $381, while under our plan he
would owe $396. Professional tax preparers would
typically charge him $75 or more to file his Federal
and State tax returns. He might save up to $25 in
these fees by filing himself using our 540-Simple tax
form - more than making up the additional $15 due in
taxes under our plan.
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senior pensioner whose income is $23,314
senior pensioner is 74 year old. She receives a
monthly income of $1030 from Social Security as well
as dividends and interest of $10,954 on her
investments. Under the current Tax Code she would pay
no state taxes. Under our plan she would owe $98. The
taxes our pensioner owes are much lower than the
single worker in our previous example because the
income from Social Security Distributions is not taxed
by California. Professional tax preparers would
typically charge over $200 to file her Federal and
State tax returns. She might save up to $70 in these
fees by filing herself using our 540-Simple tax form.
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single mother whose income is $46,181
single mother is a head of household with a college
age son. She rents and claims the standard deduction.
Under the present Tax Code she would owe $698 in state
taxes. Under our plan, which does not offer a child
tax credit, she would owe $904. Professional tax
preparers would typically charge her $200 or more to
file her Federal and State tax returns. She might save
up to $70 in these fees by filing herself using our
540-Simple tax form.
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single white-collar worker whose income is $47,881
single homeowner is manager at a local supermarket.
He claims $15,190 in mortgage interest and property
tax deductions. Under the present Tax Code he would
pay $1158. Under our plan he would owe $1021. Professional
tax preparers would typically charge $230 to file his
Federal and State tax returns. He might save up to $75
in these fees by filing himself using our 540-Simple
tax form as well as saving $137 in state taxes.
summary, our plan distributes the tax burden evenly and fairly
based on total income, not how that income is spent or the age
of the taxpayer or how many children are in the family.
our plan, the tax burden in the examples above as a
percentage of income was 1.73%, 0.42%, 1.96%, and 2.13%.
the present California tax code, the tax burden in the
examples above as a percentage of income was 1.67%, 0.00%,
1.51%, and 2.42%.
marginal tax rate under our plan is a constant 2.5% while
in the examples above the current tax code imposed
marginal tax rates of 4, 0, 4, and 8 percent.
IRS estimates that the time required by taxpayers to collect
the necessary records, study, prepare, and submit a 1040 Form
at 15 to 25 hours. The California 540 Form is not a lot
simpler. We expect, however, that you will find the time it
takes you to prepare our Form 540-Simple will be measured
in minutes rather than hours.
hope that you will be pleased with the tax savings you may
expect from our plan as well as the savings both in time and
record keeping. You may also save money you have previously
given to a professional tax preparer as well.
you've computed your new "Simple Tax" with our proposed
Form 540-Simple, compare the result to what you paid
in state taxes in 2002. Be sure to include the cost of a
professional tax preparer if you used one.
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