Panel reviews sweeping (California) state tax reform

[Newsjock]

Source: San Francisco Chronicle

The state sales tax would be eliminated along with taxes on corporate income in a sweeping proposal considered Thursday by a blue ribbon commission charged with finding ways to overhaul California's tax system.

The Commission on the 21st Century Economy was convened in autumn by Gov. Arnold Schwarzenegger in the midst of the state's worst financial crisis. The 14 commissioners - appointed by the governor and Democratic legislative leaders - have a Sept. 20 deadline to recommend a plan to stabilize the state's erratic revenue stream.

... Commissioners became testy at times as they debated the merits of the proposal during the seven-hour hearing.

University of Connecticut law Professor Richard Pomp, a Democratic appointee, strongly argued against outright elimination of the corporate tax, and also criticized the plan to reduce the personal income tax because most of the reductions would benefit the wealthy.

He also took exception to the proposal that would eliminate many itemized deductions for individuals while preserving certain tax credits for corporations.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/09/11/MNBC19LAUE.DTL&tsp=1

[earcandle]

1. IF we take the taxes away, how do we pay for services? General Services, like education, health,

roads, etc? 

[Auggie]

3. There will be new taxes on the service industry

A new net receipts tax would be imposed on all business entities. The commission is initially proposing 4.2 percent, and businesses with less than $500,000 in revenue or $250,000 in tax liabilities would be exempt. Certain business tax breaks such as the research and development credit would remain intact.

The new business tax would make up for the reduction and elimination of other taxes by - for example - imposing taxes on the service industry, Cohen said.

One such example would be in getting a car fixed. Under current law, motorists pay a sales tax on parts, but not on labor. The new business tax would force companies to pay taxes on all revenue, including labor.

Prices on goods and services would increase as businesses pass the tax costs to consumers.

[bbgrunt]

4. would the service tax include ALL services ? I am

specifically wondering about things like financial services, insurance, medical services etc. This could become extremely onerous although I would welcome taxes on financial services.

[Auggie]

5. I don't know if professional services are included

[Beavker]

2. People. We are losing.

We are losing to the Corporations. They will soon take completely over, as our Senators, installed by us, are working for the highest bidder after you put them in office.

I fear there is not turning back. It's a self fulfilling prophecy.

[DBoon]

7. our current system is *too* progressive for them

the top 1% pay 25% of taxes and that is a bad thing to them.

All they want to do is eliminate income taxes and convert them into a universal sales tax, that would cover services (medical care?)

They want to relieve the top 1% of their tax burden!!

No mention of reforming property taxes, implementing an oil severance tax or any others

[David__77]

6. Not enough brackets.

Why on earth should there only be two brackets? There should be many, many brackets. There should be an exponential function instead actually. There should be no "brackets" per se; just a function. There rate of increase should be exponentially related to income level.