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FlashReport Weblog on California Politics

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Katy Grimes

‘Jock Tax’ is Ill-Gotten Revenue Windfall for California

Regardless what a punk Carolina Panthers’ quarterback Cam Newton may or may not be, the ugly news that he will owe $137,900 in taxes — for losing the Super Bowl – shouldn’t be the thanks he gets.

The thanks is courtesy of California’s highest-in-the-nation tax rate of 13.3 percent, known as the “jock tax” – the nonresident income taxes that states and cities enforce on athletes performing in their jurisdictions.

As Kurt Bedenhausen explained in Forbes last week, “Newton will pay California 86.3% of his Super Bowl earnings if the Panthers win. Losing means his effective tax rate will be a whopping 172.2%. Oh yeah, he will also pay the IRS 40.5% on his earnings.” This… Read More

BOE Member George Runner

Revenue Report Dangerous in the Wrong Hands

At the request of the Senate Governance and Finance Committee, the Board of Equalization’s Research and Statistics Section today released a report showing the State of California could reap up to $122.6 billion by imposing sales and use tax on services.

The size and scope of California’s service-related industry is mind-blowingly large, and the last thing overtaxed Californians need is another tax. In fact, these numbers are dangerous in the hands of legislators who want to raise taxes.

However, I hope this report stimulates conversation about how taxes can be simpler, and how we can attract more jobs to our state.

Although I strongly oppose Senate Bill 8 (Hertzberg), which would impose a $10 billion tax increase on service industries, I am open to considering a broader sales tax if it’s part of revenue neutral tax reform, such as abolishing the Franchise Tax Board and California’s income tax, along with other taxes that destroy jobs.

I’ve called for dynamic economic modeling that would show the benefits of such a change and look forward to being able to share those results with you… Read More

BOE Member George Runner

How About Eliminating California’s Income Tax?

Today during the 2015 Cal Tax Annual Members meeting, I called for a meaningful public discourse on tax reform ideas that make life easier for taxpayers. Specifically, I suggested replacing California’s income tax with a sales tax on services.

As you may know, Senate Bill 8 (Hertzberg) seeks to extend California’s sales tax to services. As currently written, the bill amounts to nothing more than a massive tax increase that would just make California less competitive while adding thousands of state auditors and tax collectors to state payrolls.

Reform, by its definition, should not include growing government or making taxes more complicated.

Any shift to a broader reliance on sales tax must be combined with real tax reform that removes barriers to doing business in our state. That’s why I proposed eliminating California’s personal and corporate income tax and the Franchise Tax Board. One less tax agency would make California a far more attractive place for jobs, retirees, and investment.

If California eliminated income tax, more… Read More

BOE Member George Runner

Tax Help for California Seniors

Senior citizens deserve to enjoy the rewards of their life’s work, but rising taxes and inflation leave many feeling squeezed.

California seniors know about discounts at restaurants and the movies, but they may not be familiar with the tax benefits and services available to them. For example, many seniors qualify for property tax exemptions, income tax credits and free income tax preparation.

That’s why I created the new Tax Help for California Seniors webpage. This online resource provides helpful information and links designed to help seniors be aware of important tax tips relating to property tax, sales and use tax and income tax.

Please take a look at this new online resource and consider sharing it with your family and friends who are seniors.… Read More

BOE Member George Runner

Look Twice Before Filing Your State Income Taxes

Californians who sold their home in a short sale in 2013 may be at risk of overpaying their state income taxes.

As you may recall, the Franchise Tax Board informed me late last year that Californians who had mortgage debt forgiven in a short sale are not required to pay income tax on that debt.

I’ve recently learned that some tax preparation software may not be up to date, potentially forcing affected Californians to pay taxes they don’t owe. Adding to the confusion, some tax preparers may not be aware of this problem.

If you have questions, please contact my office at 1-916-445-2181. For more information on mortgage forgiveness debt relief and short sales, go to FTB’s webpage or call FTB at 1-800-852-5711.

If you are unsure whether your tax preparation software is calculating your short sale correctly, you should contact the tax preparation software company’s customer service department for assistance.

Taxpayers should never have to pay more taxes than they owe. Be sure to look carefully before filing to avoid overpaying… Read More

BOE Member George Runner

Retroactive Tax Fix Rights a Wrong

It’s no secret I’ve been highly critical of the Franchise Tax Board’s decision to assess five years and more than a hundred million dollars in retroactive taxes against California small businesses and start-up investors.

Thankfully this wrong was finally righted today with the Governor’s signature of Assembly Bill 1412.

AB 1412 is the product of rare bipartisan legislative cooperation. It will ensure that taxpayers who followed the law in good faith will not be taxed retroactively for doing so.

I commend all involved for their hard work in bringing about a fair and reasonable outcome for California taxpayers.

If you’d like to learn more about this issue, my letters urging action are available online: 2/5/13, 4/26/13,Read More

BOE Member George Runner

Making Life Simpler for Taxpayers

I am pleased to announce Senate Bill 582, a joint effort between my office and Senator Steve Knight, has passed both houses of the Legislature and reached the Governor’s desk.

SB 582 will make life simpler for taxpayers by requiring the Board of Equalization, Franchise Tax Board and Employment Development Department to consider integrating their websites to better serve taxpayers. The idea is to create a one-stop shop for taxpayers to visit for all of their tax services. This will streamline filing requirements by providing taxpayers with up-to-date integrated access to accounts with all three tax agencies.

In a 2005 report the non-partisan Legislative Analyst’s Office urged the creation of a portal that would allow a taxpayer to “log onto a single website and through a series of menus, be directed to the proper form which would allow them to file their taxes or remit a payment.” As you can see, this reform is long overdue.

It’s not easy doing business in California. One of many challenges for a business owner is the confusing… Read More

BOE Member George Runner

Retroactive Tax on California Entrepreneurs Unwarranted and Unfair

As an elected official and taxpayer advocate, I cannot remain silent while state tax officials punish California taxpayers who in good faith followed our laws.

That’s why I’m urging the Franchise Tax Board to reverse a controversial staff decision seeking millions in retroactive taxes from California entrepreneurs and small businesses.

In my letter to the three members of the Franchise Tax Board, I call FTB’s December 2012 staff action “unwarranted and unfair to taxpayers.”

I explain that the Second District Court of Appeal’s decision in Cutler v. Franchise Tax Board does not require FTB to take this action. I warn that it “sends entirely the wrong message to investors, entrepreneurs and job creators doing business in our state.”

A growing bi-partisan chorus of California legislators, newspapers and… Read More

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