Budget Proposal Puts Taxpayers in a No-win Situation

Wednesday, June 20, 2012

The way to move forward and restore California to greatness is by creating jobs. Most people agree with this principle, and even Democrat Legislators give the concept lip service. Unfortunately, the decisions made over the years by the Legislature have only deepened our economic troubles and contributed to California's chronic job shortage. The budget passed last week is no exception. 

The state budget passed by the majority party will only further California's jobs deficit. In addition to the main budget bill, various trailer bills will impact specific parts of California's economy and government.

One such measure is slated to come to a vote this week, Assembly Bill 1475, represents an insidious backdoor tax increase on Californians.

One of the latest bad ideas Democrats have produced, AB 1475 would authorize the Franchise Tax Board (FTB) to impose a 20 percent penalty on taxpayers who 'over-pay' their taxes. Think about that: the majority party wants to fine Californians who over-pay their taxes. 

This bill does provide an exemption if the overpayment has a "reasonable basis." However, nowhere in the statute is "reasonable basis" defined, leaving the FTB to decide such "reasonableness" on a case-by-case basis with no need to explain its actions to the public. Whose side do you think the government will take?

Currently, some taxpayers are subject to a 20 percent "understatement penalty" if their tax withholdings are too low at the end of the year. This potential penalty encourages taxpayers to overstate their taxes in order to avoid the penalty and, in effect, give the state an interest-free loan.

Allowing the tax board to collect penalties for both overpayments and underpayments puts taxpayers in a no-win situation. This proposal even prohibits taxpayers who have overpaid their taxes from protesting the penalty at the tax board. For many the only course of action would be to file suit, which would increase litigation costs for both the taxpayer and the state.

By proposing legislation that makes it even harder to operate a business, Democrats appear to think that government should be responsible for creating jobs, not the private sector. This tax proposal is just the most recent in a long line of laws micro-managing businesses and individuals by regulating and implementing more mandates.

Targeting honest taxpayers in an effort to extract more money to feed the out-of-control state government is not the way to balance the budget.  It's time the Legislature stopped putting "bull's eyes" on the backs of taxpayers and instead started working to give employers and individuals a reason to invest and create businesses and jobs in California.