How Much Will Extended Tax Hikes Cost?

SACRAMENTO, Calif. (AP) — That $1,000 flat-screen TV you bought last year came with an extra $10 in sales tax. The five-year-old car with an original price tag of $18,000 cost $54 more to license than it did three years ago. And the $100,000 you and your spouse earned meant an extra $320 in state income taxes.

Those are examples of how the Legislature’s temporary tax increases two years ago affected personal income, sales and vehicle taxes in California, levies Gov. Jerry Brown and Democratic lawmakers want to extend for another five years.

The tax increases have generated $17 billion since they were approved by the Legislature in February 2009, with $3 billion more to follow by the time the last of them expire on July 1.

If the Democratic governor gets his way, a measure to extend those tax hikes and reduce California’s $26.6 billion budget deficit will go before voters in a June special election. The governor is trying to round up enough votes in advance of expected action in the coming days in the Assembly and Senate.

Should voters opt to keep paying the taxes, analysts expect state coffers to take in an additional $9 billion to $11 billion annually over the five-year period. The decision would affect all Californians who pay income taxes, own vehicles and shop from a retailer.

For starters, Californians have been paying an extra 1 percent in sales tax, a half percent more for vehicle licenses and a quarter percent higher income tax rate. Some tax filers also have received a lower tax exemption for dependents.

The tax hikes mean a single person making $40,000 a year pays an additional $125 in annual income tax. For a couple making $60,000, it’s an extra $175.

To Jim Verboon, a walnut farmer in Laton, south of Fresno, any dollar more is a dollar too many. He said he would vote against an extension of the tax increases because state government has lived beyond its means for too long. Spending cuts are the only answer.

“I’m not opposed to taking a step down at a time so we’re not just taking a meat ax to it,” Verboon, 60, said of the budget.

Yet Brown and Democratic lawmakers say that is precisely what will happen — with severe cuts to public schools and thousands of teacher layoffs, for example– if they have to close the deficit with $27 billion in cuts. That amount represents nearly one-third of all general fund spending.

No Republican lawmaker has signed on to Brown’s budget plan. GOP legislators say they have been hearing from constituents like Verboon who feel weighed down by taxes and want to see public money spent more prudently.

“It’s 50 cents here and it’s 50 cents there, and at the end of the day, it’s real money,” said Assembly Minority Leader Connie Conway, R-Tulare.

California has the sixth-highest tax burden in the country, according to the conservative but nonpartisan Tax Foundation, based in Washington, D.C. Residents pay 10.6 percent of their income toward state and local taxes, compared with a national average of 9.8 percent.

That includes sales taxes. Because of the increased rate, a shopper would pay an additional $5 for a $500 washing machine or an extra $150 for a $15,000 Ford Focus.

If bought new, that car also would require $76 more for a vehicle license fee than it did before the increases, according to the state Department of Motor Vehicles.

All told, the increased taxes have cost Californians $260 a year on a per capita basis, the state Department of Finance estimates.

Jackie Scofield said the extra charges are necessary to support higher education and other programs. She is finishing a business degree at California State University, Sacramento, but said she could have graduated one or two semesters earlier if budget cuts had not made it so hard to get into required classes.

“So many things are already being cut, and I can’t imagine it being worse,” said Scofield, 24. “At least it’s not raising it, just keeping things the way they are.”

The California Retailers Association says it’s important that the governor’s budget plan calls for maintaining the current tax level, not raising it.

“We’re hoping since it’s an extension and not an increase, we won’t see a change in behavior,” said the association’s president and chief executive officer, Bill Dombrowski.

Democrats have latched onto that point in their attempt to generate support for a special election that would allow voters to decide the issue.

The governor’s budget plan has been supported by numerous business groups around the state, many of which have acknowledged that cutting nearly $27 billion from state spending might do more harm to the economy than the extension of the previous tax increases.

Even the California Chamber of Commerce said it would not criticize any lawmakers who voted to place the tax question on the ballot.

Assemblyman Gil Cedillo said Californians have gotten used to the taxes and can continue to adjust.

“Would we like to pay less?” said the Los Angeles Democrat, a member of the Assembly Committee on Revenue and Taxation. “Would we like to have things for free? Of course. That’s not reality.”

Jon Gutierrez will be affected either way. A state worker who is required to take several unpaid days off each year, he knows state government will have to make even deeper cuts if the tax increases expire this year.

But the 48-year-old Sacramento resident also isn’t keen on paying more in taxes.

“How much more can you squeeze out of us, individually and collectively?” he said.

(Copyright 2011 by The Associated Press.  All Rights Reserved.)

  • Don

    I guess the tax-rat Cedillo just can’t get it through his partisan scull that the California taxpayers are already paying far above the national average in taxes. He asks: “Would we like to have things for free?” Mr. Cedillo, the taxpayers are carrying a stifling tax burden…and we are not asking for anything for free.
    The state must live within it’s means, just as hard-working families must do.

    • dunphy

      okay, offer up some solutions that don’t involve slogans.

      • Don

        Hey dumphy…How about CUT SPENDING TO EQUAL INCOME!
        That is an HONEST SOLUTION to the deficit in this state, and is not a “slogan”.

  • dave wynn

    We should all agree to the tax extensions. Look at all the people who will get laid off if we don’t. What’s an extra $200 a year in taxes a year will do to a person. Look at how many people who buy $3.00 coffee drinks everyday. An average coffee drinker spends over $500 a year on drinks on themselves and rather not pay for a teacher to keep their job. Californian’s are just a bunch of whiners. Both the republicans and democrats are idiots when it comes to the budget. What happens if we don’t keep the extension; no money for jobs, roads, school programs, higher fees for public colleges, disability group, low income and many more. Stop complaining and pay your damn taxes.

    • usafretired

      it’s none of your business what people spend THEIR MONEY on! When they go out & spend $3 on coffee every day, they are supporting JOBS & BUSINESS. Here’s a good budget plan: Public safety first (cops/fire) Roads & schools (K-12) next, LIMITED State/local govt (water/sewer/other infrastructure), then whatever is left can be divided up for arts/higher education/welfare etc. These things should be funded on an annual basis, based on the remaining revenue in the budget. Stop the free give-away to welfare illegals, etc. Those things that affect the greatest number of people should be funded first. Everyone gets a benefit from police & fire. Everyone sends their kids to school. Everyone uses roads, sewer, water, etc. Cut administrative, ie superintendents, assistant principals, & their staff first before cutting teachers. Make the state government part-time, & require a 2-year balanced budget to be enacted BEFORE any other business can be done. No state cars/per-diem or other added benefits above their salaries. Put them in dormitory style rooms while in session. REMEMBER! They are the ones who seek those seats & should not ask us for anything more that their salary. If they don’t serve @ least 25 years at that same level of govt (municipal, state) they should not get “retirement benefits” Let them contribute to a 401k like the rest of us. This is what normal working families do when we can’t afford to pay our bills. We don’t demand our neighbors pick up the slack for us. WE PAY OUR TAXES ALREADY & DON”T WANT TO PAY FOR OTHERS!

  • name or email..

    Thanks Dave, spoken like a true hi rolling hi spending Dimocrat.. How bout this , Dave, why not give the producers a break and make the big spenders cut back, does that idea grab ya where it hurts, Dave ? More tax = more spending= of the same old situation next year and the next and the next etc etc

  • Buck

    I am sick of having to pay for other’s mistakes. Just because the IDIOTS running this state can’t control the spending we should not have to suffer the payback. How about the “Law Makers” donate their yearly salaries for the next three years. They’re the ones that spent it, how about they cover it!

  • dave wynn

    I am neither a republican or democrat or any affiliated with any political parties. I am just a regular joe with a family. I don’t make the big bucks nor do I disagree with you. I agree that the state spends our money in all the wrong areas and no one is held accountable for what they do. Yes there needs to be reform in how we run our government. Yes taxes do suck but people like you and I get affected when people don’t have jobs. When people don’t have jobs and money to spend everyone in California is less reluctant to spend their money on anything and business’s that you and I work for suffer. Nor republicans and democratic political parties know what they are doing. They should let the people decide on whether to extend the taxes.

  • Jeff Paulson

    Extending the taxes or not … until the State Legislature stops spending more than is coming in … it won’t matter.

    While I don’t like the idea of the extended tax increases, I could support them … IF the State stopped finding new ways to spend money.

    People please understand, we do not have a revenue problem in this State, it’s a SPENDING problem.

    Extending tax increases can help ease the pain, but there will be pain … IF we spend within our collected revenues.

    Unfortunately our State has a bad habit of continuing to find new ways to spend money beyond the revenue it collects. So I’m not convinced that collecting more taxes solves the real problem of OVER SPENDING.

    Know this, unless our State Legislature stops spending more than is collected, it will not matter how much tax revenue is taken. We will continue to have problems. It’s not a matter of if we just had a little more we’d be okay … the reckless spending must stop.

  • john

    Get rid of unions and problem solved!!!

  • Thomas McDonald

    Look at this way, we have paid this so called temporary tax for the last few years, did nothing to help us out of the government mess we are in. So what makes you think that anything is going to change now? I can answer nothing will, until the state learns to live within reason..I will not support this tax again..

  • How Much Will Extended Tax Hikes Cost? | Sactown Places

    […] years ago. And the $ 100,000 you and your spouse earned meant an extra $ 320 in state income taxes. CBS Sacramento VN:F [1.9.7_1111]please wait…Rating: 0.0/5 (0 votes cast)VN:F [1.9.7_1111]Rating: 0 (from 0 […]

blog comments powered by Disqus
The Taz Show
LIVE: Monday through Friday from 6am – 6pm ET

Listen Live