Jerry's Kids

As California taxpayers (those of you who actually pay some taxes) we are the new Jerry's Kids.  Your special recognition will come on April 15th, not on Labor Day as when Jerry Lewis did his charity gigs on TV.  Jerry Brown will be recognizing us on Tax Day.  Yesterday's Wall Street Journal highlighted how the states with the highest state income taxes are most at risk as the Fed wrangle over the federal tax rates.  Here's the essence: of the $249.7 billion that was federally deducted for state income taxes

$51 billion of those writeoff were claimed by residents of one state, California....a mere five states accounted for nearly half the federal revenue lost from this tax deduction....we believe in federalism, and if affluent liberals want to pay 13.3% of their income to live in San Francisco, that's their foolish privilege.  But it becomes everyone's problem if some of that tax burden is effectively borne by residents of Knoxville, Lubbock and Orlando because of the federal tax deduction.

So our little, local band of Jerry's Kids had better watch out.  If the Journal is in favor of eliminating a deduction where 20% goes to good old California, it's no great leap of faith to think that a bunch of Congressional bean counters will come up with the same plan--or worse.  Throw in elimination of part or all of the mortgage deduction on all of our "jumbo" loans and you will see a cliff the size of Half Dome on the horizon.

Comments

[hillsider]

A government which robs Peter to pay Paul, can always depend on the support of Paul.

H.L. Mencken? Mark Twain? George Carlin?

[Joe]

George Bernard Shaw said it.

[Joe]

Here's a SacBee piece today that talks about the immediate results--which are not surprising since the rate increase was retroactive, so nobody could react to it:

After years of budget agony, California is seeing something strange this month: a heap of excess cash.
The state is poised to finish January about $4 billion ahead of what forecasters expected in income taxes, according to the Legislative Analyst's Office – the biggest one-month overage that state fiscal experts can recall in recent memory.
California also set a single-day record Jan. 16 when the Franchise Tax Board received $2.2 billion in taxes, mostly in payments from the 6 percent of filers who pay quarterly rather than have money deducted from paychecks.
But state leaders shouldn't get too giddy.
The one-month boom likely comes from a perfect storm of tax changes at the state and federal level, and budget experts urge restraint because a dollar received today could simply mean a dollar less tomorrow. This comes on top of an already volatile tax system that relies heavily on wealthy residents whose income is hard to predict.

Read more here: http://www.sacbee.com/2013/01/23/5134032/california-sees-a-revenue-bump.html#storylink=cpy

The more interesting think is golfer Phil Mickelson's reaction noted here from the WSJ:

After a brilliant round Sunday at a tournament in La Quinta, California, Mr. Mickelson hinted that new tax burdens might drive him out of the state, out of professional golf, and perhaps even out of the country. "There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state, and it doesn't work for me right now," he said. "So I'm going to have to make some changes."

The fan favorite who has won 40 events on the PGA tour described various state and federal levies and concluded that his tax rate now exceeds 60%. The sticker shock is understandable, now that President Obama has succeeded in raising the top income-tax rate this year to 39.6% from 35% and the top Medicare rate almost a full point to 3.8%. Meanwhile, Governor Jerry Brown persuaded Californians last fall to raise the top state income tax rate to 13.3%.

[Anne]

Uh oh, Cranky Joe's back. It's going to be a long 4 years.