Arnold wants 15% flat state income tax!

[anaconda]

that would be higher than the top rate in any state

Thank you. That's sort of what I was thinking. What a joke.

 

[anaconda]

a 15% flat tax with the first 20 000 exempt is quite good... it doesnt tax the very poor (under 20 000k) and allows for success to be rewarded
a bit like the 13% flat tax in Russia.

compare this to 50% progressive tax here in some western europe countries.

Is Arnold exempting the first $20K?

 

[Sandman33]

Arnold is a Nazi Fascist Bilderberg puppet piece of shit.

The ONLY good thing about Kalifornia is prop 8.

 

[TastyWheat]

Not like it matters, but the $20k deduction makes this a progressive tax. The rate isn't flat either, since those just above $20k are paying a much lower percentage than those making $200k. The only real flat tax is if everyone pays the same amount.

If the rate wasn't so steep I'd call this a good idea.

 

[Brian4Liberty]

This is a horrible idea. I think your numbers are misleading too.

Top rate Federal income tax rate is 35%
FICA tax is 7.65% (income limit in 2009 is $106,800), FICA payment at top level will be: $6,621
Medicare = 1.45%
California Income tax = 15%

That puts the total without FICA at 51.45% at the top level (don't forget to add the $6,621 for max FICA).

If you include all the "other" taxes California has, I would wager a guess that the top tax rates would be somewhere in the 60% ++ area.

The "Median income" in California is around $64K per year. This puts them into a 25% Federal Tax bracket.

Median income Tax rate:

Federal Income Tax: 25%
FICA: 7.65%
Medicare: 1.45%
California Tax: 15%

Total: 49.1%

With all the other taxes, this "Median" bracket will be paying close to 60% as well.

Tax revolt anyone?

Don't forget the 8.25% to 10.25% sales tax in California (depending on City/County)...

And you also have to add all of the misc taxes (fees, licensing, etc, etc.).

Are we up to 70% yet?

 

[Brian4Liberty]

Not like it matters, but the $20k deduction makes this a progressive tax.

As opposed to all of the regressive taxes being proposed (mostly by Democrats!)?

Gasoline, alcohol, junk food, cigarette, soda, etc. All regressive taxes.

 

[FSP-Rebel]

If ever there was a reason to move away from California.
Taxes are too high and it's all just back door wealth redistribution, with state employees benefiting from the largess of the state. It's quite sickening.

Move up to NH via the Free State Project as we have 0% state income AND sales taxes, bring the businesses too. We've had many recent movers from Cali for obvious reasons and that's before this absurdity was brought up.

 

[TheEvilDetector]

This is a horrible idea. I think your numbers are misleading too.

Top rate Federal income tax rate is 35%
FICA tax is 7.65% (income limit in 2009 is $106,800), FICA payment at top level will be: $6,621
Medicare = 1.45%
California Income tax = 15%

That puts the total without FICA at 51.45% at the top level (don't forget to add the $6,621 for max FICA).

If you include all the "other" taxes California has, I would wager a guess that the top tax rates would be somewhere in the 60% ++ area.

The "Median income" in California is around $64K per year. This puts them into a 25% Federal Tax bracket.

Median income Tax rate:

Federal Income Tax: 25%
FICA: 7.65%
Medicare: 1.45%
California Tax: 15%

Total: 49.1%

With all the other taxes, this "Median" bracket will be paying close to 60% as well.

Tax revolt anyone?

If you are trying to find out the impact of Sales Tax, its percentage should be applied to take home pay, not to pre tax income,
therefore the actual numbers are somewhat lower than what your numbers show.

Eg. If you earn $100 and have $20 taken away in regular income taxes (suppose you have 20% income tax),
you have $80 left over to spend. You then apply 15% sales tax on this amount ($80), rather than 15% on
the $100 pre tax amount.

Not doing so, leads to an overestimation to the order of 15% of $20 = $3 (ie. 3% error).

To make matters simple, you can use this formula, express rates as decimals, ie. 10% = 0.1:
LEFT OVER INCOME PORTION = (1-INSTANT TAXES) * (1-SALES TAXES)

EFFECTIVE TAX RATE = 1 - LEFT OVER INCOME PORTION

if you bring formulas together it is:

EFFECTIVE TAX RATE = 1 - (1-INSTANT TAXES) * (1-SALES TAXES)

ie. in my example (1 - 0.2) * (1 - 0.15) = 0.68 is left over, meaning 1-0.68=0.32 is total tax load (32%).

In your bottom example it would be something like this:

Federal income tax=25%
FICA=7.65%
Medicare = 1.45%
California Income tax = 15%

(1 - 0.25 - 0.0765 - 0.0145) * (1 - 0.15) = 0.56015 left over, therefore effective tax rate of 0.43985 = 43.985%

as you can see if you were to simply add them up you would get: 49.1% which is more tax than what you would actually pay
(assuming that we are only dealing with the above mentioned taxes) if you were to spend all your after "instant" tax money.

Also, given how the sales tax is implemented, ie. add 15% on top of base price, the actual percentage of sales tax in
the sale price is:
ACTUAL EFFECTIVE SALES TAX PERCENTAGE =
AMOUNT OF INCLUDED SALES TAX / FINAL SALE PRICE =
( 0.15 * PRE-TAX BASE PRICE ) / FINAL SALE PRICE =
Note: { FINAL SALE PRICE = PRE-TAX BASE PRICE * 1.15}
( 0.15 * PRE-TAX BASE PRICE ) / ( PRE-TAX BASE PRICE * 1.15 )=
0.15 / 1.15 = 0.1304 = 13.04%

Simple example:

Suppose you want to sell an apple for $1, you then add 15% sales tax and sell for $1.15.

well 15c / $1.15 is not 15% its 13.04% (4 d.p accuracy)

using this percentage in our original calculations we get:

1 - (1 - 0.25 - 0.0765 - 0.0145) * (1 - 0.15/1.15 ) = 0.4269 (4 d.p accuracy) = 42.69% tax rate

 

[Brian4Liberty]

If you are trying to find out the impact of Sales Tax, its percentage should be applied to take home pay, not to pre tax income,
therefore the actual numbers are somewhat lower than what your numbers show.

He didn't include sale tax. You do understand that California has both an income tax and a sales tax?

The income tax applies to your gross, and yes, sales tax applies to what you buy. If you have no money for savings, then you spend all that you make, and that would be ~9% on your net. So yes, it's a little less than if sales tax applied to your gross.

 

[TheEvilDetector]

He didn't include sale tax. You do understand that California has both an income tax and a sales tax?

The income tax applies to your gross, and yes, sales tax applies to what you buy. If you have no money for savings, then you spend all that you make, and that would be ~9% on your net. So yes, it's a little less than if sales tax applied to your gross.

You are right, I failed to notice, where I should have, that the tax is an income tax not a sales tax.

 

[TastyWheat]

As opposed to all of the regressive taxes being proposed (mostly by Democrats!)?

Gasoline, alcohol, junk food, cigarette, soda, etc. All regressive taxes.

Just trying to make a point. Flat usually isn't flat and the government wouldn't know fair if it bit them in the ass.