Friday, February 20, 2009

California Budget

I was unhappy to see the California budget balanced on the backs of California retailers. The 1% sales tax increase is another slam against brick and mortar retailers and the customers that frequent them. You would think if you wanted consumers to start spending again, you would avoid disincentives that push them online to buy from other states (evading taxes), or forces them to stay home.

What the state governments would really like to do is get hold of those evaded taxes, or "use tax" that people avoid paying with many Internet sales. Most people don't know this, but every purchase from a retailer online is subject to California state sales tax, even when they don't charge you. You're supposed to report this on your taxes, but it's ignored by just about everyone (it's apparently a red flag for retailers in some states, resulting in a near automatic audit).

The other annoying tax is the VLF, or Vehicle License Fee, which gets doubled under the new budget. This is a regressive tax of the worst kind, one that imposes a greater burden on the poor than the rich. I, being closer to the poor category, find it especially vexing. I pay little state tax because of my income and business, but the VLF fee would be the equivalent of doubling my state income tax. State income taxes are going up a quarter of a percent as well. Until the state does a comprehensive overhaul on how it generates and spends our money, we'll always have these kinds of problems in hard times. There's talk of reform already.


  1. I got a "fix it" ticket in November for a brake light that was out. I replaced the bulb and got the ticket signed off by the police in December, and tried to go to the court to clear the ticket.
    They refused to take my money (a $10 "processing fee") or clear the ticket because I hadn't been mailed a notification yet.
    The notification arrived in January, when the tax (I mean "processing fee") on this public safety service had been increased to more than double what it had been (now $25 iirc).
    Was the forced delay in my clearing this deliberate to make me pay more? I'm certain.
    Is this related to the budget crisis? You bet. And police departments are cracking down on anything that produces fines and "processing fees" in order to raise more money for the city, county, and state.
    Ask yourself this question: who is more likely to be driving a car that needs a small repair? A wealthy person, or a blue collar worker?

  2. You are also supposed to pay CA state sales tax on items that you purchase when you travel out of state, and that you bring back to CA with you.

    You are supposed to pay these sales taxes at the end of the year, when you file your state income taxes.

  3. What the governments fail to consider is that many taxes and fees are voluntary or based on citizen reporting. If you start pissing off people, they'll just fudge numbers until they feel justified. How many people denied their state tax refund are likely to fudge their taxes if given the chance? This has the unintended consequence of undermining the entire system.

    I had this kind of conversation with someone at the state board of equalization. They act belligerent, and will fine you without reimbursement, even if it's there fault! I told them I found their behavior odd, since they're relying on my voluntary reporting.

  4. But wait! Aren't these the same types of people we want running our health care system?*

    If you think this incident is unfair, wait until you see socialized medicine. You will have a lot more to worry about than a lil' ol' 1% increase. But feel free to rationalize why things would be entirely different and better in the case of socialized medicine. Oh, incidently, when I previously posted that expenses > funding for public medicine, the reponse on this blog was "well, raise taxes."


    On another note...

    One time I had to analyze a S Corp tax return for work. I called the IRS to ask if a certain expense was legal. They said "yeah sure no problem." I had my doubts. So I called a second time, got a different person, who told me "no we'd audit you and you'd be in big trouble." Government tax types are not exactly competent or trustworthy.

    * it's state in this case, not federal, but both systems lack fairness and competency

  5. State of California is generally more aggressive and less competent than the Federal Government when it comes to revenue collection and government services. They're still trying to collect my license tag fees for 2009 even though I haven't lived in the state since 2007.

    They had no problem in updating my address, but somehow failed to note that the only reason they had my new address was because I gave it to them when notifying them that I had moved out of state!

    Ultimately, if the states don't want to see sales taxes disappear as a form of revenue, they're going to have to give up some more of their power to the Federal Government in the form of a nationally regulated sales tax.

    BTW Gary, just to rub it in, I just paid my Arkansas tag fee: $25.

  6. Odd that when conservatives suggest a "flat tax" with a few simple to understand exemptions and deductions, they are told that it is a "regressive tax" and that taxes need to be "progressive" so that wealthier people pay more (and a higher percentage of their income) in taxes.
    Yet we have liberal Democrats imposing more and more regressive taxes and fees that tend to cost more to the poor or working class.

  7. That had me wondering which of these "fixes" were Democrat sponsored and which were Republican.

  8. Indiana and Illinois always had higher registration fees, but that was because their per mile of freeway cost of maintenance was so much higher.

    The AOC (Administrative Offices of the Courts) set the new fees and fines, and the revenue generated by these fines does not go to local jureisdictions. It goes up to the State, then comes back down in a complicated scheme of red tape and stupidity.

    It is unconstitutional for officers to be made to answer a quota or performance expectation. Any officer who does so risks his employement, as does any supervisor who orders them to do so.

    As far as the clerk's responses to your attempts to get it taken care of: Do not put down to corruption that which can be explained by simple complete ineffeciency or stupidity. The AOC dropped this on the State clerks on 01/01/09.

    I am not certain it is constitutionals, but the AOC is the Supremes, so they must believe they can get away with it. If it is overturned, they have to pay everyone back. Not smart.

    The Griffin

  9. While the department can't set quotas for tickets, they can tell you that they want to "crack down on x" - x being drunk driving, speeding, expired registrations, brake lights that need replacing, or anything else.
    The "fix it ticket" is not supposed to be punitive, it is supposed to be a friendly reminder to help promote public safety (I know that I didn't realize my light wasn't working - hard to check your brake lights by yourself) - beneficial to the public as a whole.
    The officer who gave me the ticket told me "You won't have to pay anything, just get it fixed" - evidently not realizing that there is a fee to get the ticket cleared by the court. I can forgive him for that - I also remember when it was free to clear a "fix it ticket".