THE CAL SIMPLE TAX PLAN

         About Us

         Proposed 540-Simple

                   Introduction

                   How to Use It

                   Revised Form

                   FAQ

         Economic Impact
         Endorsements & Press
         Sign Our Petition
         Contribute
         Contact Us
  
 
    
   
 
 

UNITED CALIFORNIANS  

FOR TAX REFORM  

info@CalSimpleTax.org   

 

THE CALIFORNIA SIMPLE TAX

Frequently Asked Questions


Q: Why is it important to do this ??

A: The cost of tax compliance to the taxpayer is very real both in time wasted as well as in the expense of professional tax preparers. This cost of compliance is a total waste of taxpayer dollars and is growing every year. For the most part this expense is unnecessary; for example over 60 percent of California Taxpayers claim only the standard deduction yet most of them are forced to slog through the 63 pages instructions of the CA 540 Tax Form. Our Plan would remove this burden for three out of four California Taxpayers. The state would also save on the expense of printing from 7 to 10 million unnecessary 63 page 540 tax booklets and the cost to examine the complex tax returns they produce.

Q: Why An Initiative ??

A: The legislature has been in gridlock for the past year. We chose the initiative process as a way to get the issue before the people of California. The initiative process is a difficult and costly process, but it is nothing in comparison to the torture test most taxpayers are put through every April 15th by both the IRS and the Franchise Tax Board.

Q: Why should I support this if I earn more than $50,000 or $100,000 ??

A: There is no question that you are overtaxed and deserve relief. The implementation of our simple tax plan will give us the the platform to point out the absurdity of maintaining a punishing 9.3 percent tax rate for honest taxpayers while continuing to maintain loopholes which give away nearly 1/2 of the revenue collected by the California Personal Income Tax. Be assured that we will continue to lobby to reduced your tax rates as well.

Q: Is it really that simple ??

A: Yes it really is.  Remember the Social Security administration collects more from California workers than the State does. When is the last time you filled out an annual tax report to SSI ?? You never did - such a form does not even exist. They simply withhold the proper amount from your earnings in the first place.

Q: Besides simplicity are there any other benefits ??

A: Record keeping is greatly reduced along with all the headaches that entails. The information you need are Form W2 from your employer and Federal Forms 1099 from your financial institutions and brokers. Since all the required information will be supplied to the tax authorities by your employer and your financial institutions there will be no need to audit your personal records.

Q: What would be the Impact on California Tax Revenue ??

A: The State financial analysts estimate that our plan will produce a revenue loss of $900 million the first year and $700 million thereafter. This analysis assumed that taxpayers would give no value to simplification and would choose whichever tax code resulted if the lowest tax. It is quite possible, however, that many taxpayers who now itemize will value simplification and choose our simple tax even though it may raise their taxes slightly. In this case the revenue loss would be significantly reduced.  [Please see our Economic Impact on California Tax Revenue section for more detailed data.]

Q: Why is the Projected Revenue loss so small ??

A: There are so many loopholes and tax credits in our California tax code that the actual tax collected from all married taxpayers earning up to $100,000 and all single taxpayers earning up to $50,000 is less than 2% of this group's personal income. This may be hard to believe with tax rates in effect for this group of up to 9.3 percent . Yet it is true nevertheless. If we were to replace all these tax brackets with a single 2.5% rate and allow only the current standard deduction, there would be no revenue loss. Our Plan increases the current standard deduction of $3004 for single filers and $6008 for married filers, to $7020 for single filers and $14,040 for married filers - causing a modest revenue loss.

Q: What About the fiscal effects of reducing revenue by $900 million ??

A: The legislature has increased your CAR TAX by almost five time this amount. Meanwhile the California Finance Department has identified over 20 billion dollars in tax loopholes. Eliminating 5 percent of these loopholes would more than pay for our tax plan. The Real question is why 1 percent of STATE SPENDING can't be cut.  [Please see our Economic Impact on California Tax Revenue section for more detailed data.]

Q: Does this have any effect on your Federal Tax ??

A: If you file your Federal return using the Standard Deduction there will be no effect whatsoever. Overall our plan can be expected to have a negligible effect on the nearly one trillion dollars collected by the Federal personal income tax.

 

NEXT PAGE  |

 

Privacy Policy  |  Website Terms of Use

Copyright 2003 United Californians for Tax Reform.  All rights reserved.

Please direct technical comments regarding this website to webmaster@CalSimpleTax.org