Comments on: What’s Wrong with the Parsky Panel Tax “Reforms” http://www.calbuzz.com/2009/09/whats-wrong-with-the-parsky-panel-tax-reforms/ Political news, analysis, cheap shots, commentary and more about California and beyond Sat, 31 Jul 2010 20:01:29 +0000 http://wordpress.org/?v=2.9.1 hourly 1 By: jeanmross http://www.calbuzz.com/2009/09/whats-wrong-with-the-parsky-panel-tax-reforms/comment-page-1/#comment-1317 jeanmross Tue, 15 Sep 2009 23:51:27 +0000 http://www.calbuzz.com/?p=2728#comment-1317 The distribution of the personal income tax breakdown is on page 9 of http://www.cotce.ca.gov/meetings/2009/9-14/testimony/documents/9-14_Presentation-final.pdf The fact that the proposed system would grow more slowly is in: http://www.cotce.ca.gov/meetings/2009/7-16/testimony/documents/STAFF_PRESENTATION_7-16-09.pdf And the triggers wouldn't take care of the slow growth issue. The distribution of the personal income tax breakdown is on page 9 of

http://www.cotce.ca.gov/meetings/2009/9-14/testimony/documents/9-14_Presentation-final.pdf

The fact that the proposed system would grow more slowly is in:

http://www.cotce.ca.gov/meetings/2009/7-16/testimony/documents/STAFF_PRESENTATION_7-16-09.pdf

And the triggers wouldn’t take care of the slow growth issue.

]]> By: patwater http://www.calbuzz.com/2009/09/whats-wrong-with-the-parsky-panel-tax-reforms/comment-page-1/#comment-1316 patwater Tue, 15 Sep 2009 05:39:16 +0000 http://www.calbuzz.com/?p=2728#comment-1316 Jean, I really appreciate your response. I couldn't find the data you referred to, but I'll take your word for it. But I'm still not sure this fact is a bad thing. Let's consider what working class Californian's will pay under this plan (from the commissions description of its proposed package): “1) Tax rate of 2.75% for income up to $56,000 for joint filers ($28,000 single filers) and 6.50% for incomes above that amount. 2) Standard deduction of $45,000 for joint filers ($22,500 single filers).” If I’m reading this right, wouldn’t this mean that a family making $45,000 or less would pay zero state income taxes? Compared to the current system, where that same family is paying 8% on their last dollar earned, this seems like it’s pretty good from their perspective. So let’s say we look at this from a Rawlsian perspective and not from a “lets-soak-the-rich-one” (btw I say that last bit purely in fun). That is lets think about how this proposal impacts the poor of society across generations. You lament, for example, the deduction for charity since that deduction helps rich people more with their taxes than the poor. But that money is going to charity, what should be a good cause and likely will help the poor of society (at least more than another yacht for a millionaire). Seems good so far. The property deductions are indeed lamentable (from this perspective), but I would argue they are just a political reality we have to deal with. Homeowners vote—a lot. Of course, there is also the argument that this new, simplified system will be better for California’s economy. I think generally that reducing information asymmetries and transaction costs increase economic growth. Notice I haven’t talked about the scarily new business net receipts tax, which you seem to fear so much. That is supposed to be better for economic growth by taxing all businesses, not merely the one’s that succeed. Of course, all of this neglects the awesome social benefit of not having people waste hours of their time on tax returns. You raise a lot of good points. Your worry that the tax revenue under this system won’t equal the current take is a very legitimate concern. But, as I understand the new system, there are triggers to deal with precisely that possibility. The Business Net Receipts Tax is new and untested. However, at the end of the day, the only people I see attacking this proposal (so far) are ideologues from the right and the left. Sounds like good policy to me. Jean, I really appreciate your response. I couldn’t find the data you referred to, but I’ll take your word for it. But I’m still not sure this fact is a bad thing. Let’s consider what working class Californian’s will pay under this plan (from the commissions description of its proposed package):

“1) Tax rate of 2.75% for income up to $56,000 for joint filers ($28,000 single filers) and 6.50% for incomes above that amount.
2) Standard deduction of $45,000 for joint filers ($22,500 single filers).”

If I’m reading this right, wouldn’t this mean that a family making $45,000 or less would pay zero state income taxes? Compared to the current system, where that same family is paying 8% on their last dollar earned, this seems like it’s pretty good from their perspective.

So let’s say we look at this from a Rawlsian perspective and not from a “lets-soak-the-rich-one” (btw I say that last bit purely in fun). That is lets think about how this proposal impacts the poor of society across generations. You lament, for example, the deduction for charity since that deduction helps rich people more with their taxes than the poor. But that money is going to charity, what should be a good cause and likely will help the poor of society (at least more than another yacht for a millionaire). Seems good so far. The property deductions are indeed lamentable (from this perspective), but I would argue they are just a political reality we have to deal with. Homeowners vote—a lot. Of course, there is also the argument that this new, simplified system will be better for California’s economy. I think generally that reducing information asymmetries and transaction costs increase economic growth. Notice I haven’t talked about the scarily new business net receipts tax, which you seem to fear so much. That is supposed to be better for economic growth by taxing all businesses, not merely the one’s that succeed. Of course, all of this neglects the awesome social benefit of not having people waste hours of their time on tax returns.

You raise a lot of good points. Your worry that the tax revenue under this system won’t equal the current take is a very legitimate concern. But, as I understand the new system, there are triggers to deal with precisely that possibility. The Business Net Receipts Tax is new and untested. However, at the end of the day, the only people I see attacking this proposal (so far) are ideologues from the right and the left. Sounds like good policy to me.

]]> By: sqrjn http://www.calbuzz.com/2009/09/whats-wrong-with-the-parsky-panel-tax-reforms/comment-page-1/#comment-1315 sqrjn Mon, 14 Sep 2009 21:38:48 +0000 http://www.calbuzz.com/?p=2728#comment-1315 Arn't you just assuming that middle class and working poor Californian's deduct more for health care and children? Thats highly dubious. How do you Know! that they aren't endowing fellowships at SFMOMA and writing off their downtown commercial real estate? Do you have numbers to back that up? I thought not. Arn’t you just assuming that middle class and working poor Californian’s deduct more for health care and children? Thats highly dubious. How do you Know! that they aren’t endowing fellowships at SFMOMA and writing off their downtown commercial real estate? Do you have numbers to back that up? I thought not.

]]> By: jeanmross http://www.calbuzz.com/2009/09/whats-wrong-with-the-parsky-panel-tax-reforms/comment-page-1/#comment-1313 jeanmross Mon, 14 Sep 2009 17:46:21 +0000 http://www.calbuzz.com/?p=2728#comment-1313 The numbers are the commission's own and are based on their analysis of tax return data - see http://www.cotce.ca.gov/ - Descriptive Information About The Proposed Personal Income Tax Changes. They keep the "big ticket" deductions used at the high end: charitable deductions, mortgage interest, property taxes - while eliminating things like medical expense deductions and the child care tax credit. The numbers are the commission’s own and are based on their analysis of tax return data – see http://www.cotce.ca.gov/ – Descriptive Information About The Proposed Personal Income Tax Changes. They keep the “big ticket” deductions used at the high end: charitable deductions, mortgage interest, property taxes – while eliminating things like medical expense deductions and the child care tax credit.

]]> By: patwater http://www.calbuzz.com/2009/09/whats-wrong-with-the-parsky-panel-tax-reforms/comment-page-1/#comment-1312 patwater Mon, 14 Sep 2009 17:35:56 +0000 http://www.calbuzz.com/?p=2728#comment-1312 I've always found it interesting that liberals will claim that the rich pay far less than their fair share under the current tax system because of the numerous loopholes for the wealthy to exploit. But then when someone proposes flattening out the tax code and eliminating those loopholes, it's always to benefit the rich. Well if tax loopholes are that big a deal, wouldn't that hurt the rich? Which way is it guys? Also, where are you getting this figure from: "The biggest winners would be the state’s millionaires, who would receive personal income tax breaks averaging $109,000 per year." I'm no expert but it seems that it'd be freakin' tough to factor in all the changes to credits and deductions to create an "average" like this. I'm willing to bet you just looked at the marginal change in the nominal rate. I’ve always found it interesting that liberals will claim that the rich pay far less than their fair share under the current tax system because of the numerous loopholes for the wealthy to exploit. But then when someone proposes flattening out the tax code and eliminating those loopholes, it’s always to benefit the rich. Well if tax loopholes are that big a deal, wouldn’t that hurt the rich? Which way is it guys?

Also, where are you getting this figure from: “The biggest winners would be the state’s millionaires, who would receive personal income tax breaks averaging $109,000 per year.” I’m no expert but it seems that it’d be freakin’ tough to factor in all the changes to credits and deductions to create an “average” like this. I’m willing to bet you just looked at the marginal change in the nominal rate.

]]>