Schwarzenegger suggests state consider flat tax

Could the flat tax come to California?

Gov. Arnold Schwarzenegger said today that he would like to see such “radical” proposals come out of a commission now studying an overhaul of the state’s tax system. The governor told the editorial board of the Sacramento Bee that he hoped the commission would not be afraid to propose something like “a 15%  straight tax.”

“That’s the kind of radical, daring kind of a proposal that I want to see on the table so we can look at it and say, ‘Oh, let’s study this, maybe that is the way to go,’ ” Schwarzenegger said during the discussion, which was webcast.

The current system, based on highly unstable income tax revenue that fluctuates with the economy, “doesn’t work,” Schwarzenegger said.

Advocates of a flat tax, which applies a single tax rate to all income, say it increases compliance with the tax codes because it is so simple and easy to understand. But opponents dislike that it taxes the wealthy at the same rates as the poor.

Steve Forbes and Jerry Brown both pushed for it during their presidential campaigns.

Schwarzenegger said he was concerned that the commission might be too timid in what it suggests and rule things out in advance thinking that either Democrats or Republicans would object.

 “I hope and I pray that they don’t think they have to make a political decision,” he said.

-- Michael Rothfeld in Sacramento

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Comments

[Chris Duran]

15%! What?!!!

[CPA Dan]

15%? The top California tax rate now is only 9.3% now, plus a 1% mental health services tax for incomes above $1 million.

What the governor is really proposing is a TAX INCREASE disguised as tax reform.

Don't buy into it. The state needs money. They won't be lowering your taxes anytime soon except through voter initiative.

[stu]

Whey to go Mr. Terminator. Why don't you just nail the poor and middle class, and tax the rich less. God forbid he tax his rich buddies a little more. This guy is going to destroy are state. We are going to be the banana republic of California. The people of California were stupid voting this guy in. I can't wait till his term ends next year.

[masimons]

Get rid of the Francise Tax Board for a flat tax ?
Could be good, as long as legislature can't just keep upping it all the time to cover their endless spending.

And set a national example.

[Ken]

A flat tax with a significant exemption ($20,000 or so) will not tax the wealthy and poor or even the middle class alike. In fact, it would be a perfectly progressive tax, with no penalty for earning more income. Someone making less than $20K will pay no tax, someone making $25K will only pay tax on $5,000, and somebody earning $1M will pay tax on almost all of it. The effective tax rate will increase with income. The only problem is if you start adding additional exemptions, then the system will get gamed by lobbyists.

[Steven Moshlak]

"But opponents dislike that it taxes the wealthy at the same rates as the poor."

Who gives a rat's behind about percentages, except those who don't want to improve their lot in life (see the LAT article on (funemployment).

If I make $100k a year, I pay $15k.

If I make $20K a year, I pay $3k.

Am I missing something here or is the person earning $100k/yr paying $12k more than the "poor person" earning $20k/yr?

$12k isn't anything to sneeze at.

It's the dollars collected that counts, not the percentage. Don't penalize success, but reward it.

[Julie]

Instead of doing something that is extremely unfair to those who do not make a sizable income, why not just tax pot? He's going about this the entirely wrong way. Probably because he's too conservative and too rich to make a smart move that could change the way our state is looked at.

[Airdave23]

Liberals will never agree to a flat tax since they won't be able to tax the "wealthy" exclusively to pay for more social programs. Isn't that right comrades?

Besides, until our state government learns to add, it won't make a bit of difference where they get revenue from.

[Dean]

that's the problem with our legislature. Everyone is so worried about being re-elected, that no one wants to be innovative and bold an move on "out of the box" idea/avenues of action. Sad....

[Roger Pariseau]

A flat tax is a great idea! 15% is absurd! Our whole country could operate with a 10% flat tax rate were it limited to just those entities listed in our Constitution. With a 15% rate, coupled with the almost 10% rate imposed by local jurisdictions, would have a quarter of our income taxed before the Feds got to our income as well.

Flat tax at 5%, no deductions, no exceptions, live just fine with it after firing all the bureaucrats. Think Theories X, Y or Z!

[Bill - Santa Clarita CA]

The state need to make further cut back to 1999 or 200o levels. The no Free lunch should apply to the state and the people on welfare. Parents should feed their own children and not expect the taxpayer to pay for their meals. Otherwise, don't have children or AKA anchor babies.

[Sable Crow]

Here's a suggestion: Repeal Prop 13. Every reasonable person I've talked to is baffled why two houses, right next to each other and of comparable value, can have radically different tax rates.
Phase market-value-based taxes back in over 5 or 10 years. A downturn is a great time to do it, since you could argue that market values (and therefore taxes) are much lower. If you're worried about displacing elderly or fixed-income recipients, then cap the max rate for those over a certain age (at, say, 70% of the fair market value).
This would have the effect of helping affordability (removing the undue burden on new buyers versus legacy owners), smoothing the state's tax receipts (nearly 50% of the state's current tax receipts comes from highly-variable income taxes), and restoring fiscal sanity.

[mandy]

Wake up folks. A flat tax is only on income. The wealthy do not have 'income' the way you and I have income. They clip coupons, have dividends, bonds, tax free municipals and interest. That will not be taxed. This is simply the old pledge to Grover Norquist about drowning the govt. in the bathtub. Interesting the 15%. Put that on top of the cuts to state workers and you get a 30% loss for those people. Hmmm, more houses in foreclosure etc. Look at his cuts already. He is after the poor, sick and even animals at the shelter. I will leave. California. Take my retirement and go north and I am sure many others will join me. Retirees are the best thing you can have. We spend money but don't require jobs. Either impeach him or invest in pitchforks for the coming revolution.

[marilyn]

Welcome to the Revenge of the Republicans. I didn't get my propositions so everyone and everything will suffer. A flat tax will benefit the wealthy in California and once again the people will carry the burden, much like the French peasants and workers of 1789. Do you job legislature and fix things reasonably not with some ridiculous flat tax and other right wing solutions. Dems stand up to the republicans. People vote the obstructionists out of power. Liberals can vote green conservatives can vote libertarians. Impeach Arnold, I no longer care what that costs. Explore real solutions. Why do we have small or large for that matter, school district offices, filled with staffs, superintendents and school boards. Make it a single state office. That alone would save millions. It might even standardize curriculum.

[Chisco]

Now THIS I would like to see discussed more.......if it works in California, then maybe the Congress will FINALLY take a look at it too.............

[mandy]

Everyone understand how the flat tax works? It taxes only income. The wealthy do not have 'income' like you and I do. Wealthy folks have tax free municipals, bonds, stocks, dividends etc. All of those money generating schemes are outside of 'income'. Guess who will be paying the taxes. Bingo. You and me. One more scam to pull the money out of your pocket and spare the wealthy. 15% is outrageous, especially for retired people and minimum wage workers. Add this to the already 15% cut by state workers and they get a whopping 30% cut. I see foreclosures in their future leading to less property taxes and well we all know how the cycle works. I am retired and can leave the state. I have friends who have already done so. It is either leave or purchase a pitchfork for the coming revolution.

[Derick]

Repeal prop 13. Or at least don't apply prop 13 to commercial properties. In addition to the benefits Sable Crow mentions above, this would put more tax revenue *directly* in the hands of local government and reduce local govt. dependence on the whims and intransigence of Sacramento.

[mandy]

For sable crow: I remember before prop 13 when the elderly were losing their homes, forced to sell because of taxes. The problem with prop13 is that it included apartment buildings and commercial buildings. Let's start by repealing the commercial property. I would also suggest we assess property taxes on churches. I am not sure why they get a free ride. Land before prop 13 was taxed on highest and best use. You have a house on the corner that would make a nice shopping center? Guess what happens to your property taxes. Do your homework. Research why things are the way they are. Check property taxes in other states like New Mexico. Also please research the flat tax. Stop being slaves to the 30 second sound bite on TV. Research, research, research.

[Raphael]

A flat tax is not radical or new--it's the same tired old arguments trotted out by the extremely wealthy when they don't feel like paying their taxes.

[Kate]

If I make $100k a year, I pay $15k.

If I make $20K a year, I pay $3k.

Am I missing something here or is the person earning $100k/yr paying $12k more than the "poor person" earning $20k/yr?

$12k isn't anything to sneeze at.

It's the dollars collected that counts, not the percentage. Don't penalize success, but reward it.

Posted by: Steven Moshlak

___

ANd if it costs at least $30000 a year to live in the city then the person making $20,000 and keeping $17000 is now in the hole $13,000.

The person making $100,000 and keeping $88,000 has $58,000 to spent on useless junk.

The first can not survive and the 2nd is not paying their share. And THAT result is inequitable and unfair.

The purpose of graduated income taxes is to leave the person with enough money to live and then tax the dicretionary disposable income.

Typical attiutde of the wacko greedy selfish right wing as exhibted by this poster. "Me me me mine mine mine...."

Quit whining about you and yours and dripping selfishness. The old adage is that 'to those who habe been given more,much more is expected. (And 'given' does not necessarily mean 'inherited' but also means having won the genetic roulette in terms of intellectual ability, the family roulette of a stable childhood, the educational roulettte of the quality of their early education etc etc etc.)

The world is NOT about 'rewarding' you for being greedy and selfish. The world is about responsibilities and duties. Whining and greed are SO vulgar.

ANd this type of person still expects restaurants to have waitresses and storesto have clerks to take his orders ring up his purchases. Selfish,self-centered and oblivious.

ONly someone as stupid as Schwartznegger would come up with a flat tax. It is, of course, beloved by the welathy since they do not:

(1) Have earned income- getting their income from stocks and money games instead which lowers their Federal income tax to 15% as compared to anywhere from 10-34% if they got the money by working a job.

(2) Pay payroll taxes as they don't get wages but instead get 'market' earnings.

[way]

Posted by: Airdave23 | June 05, 2009 at 02:59 PM
Liberals will never agree to a flat tax since they won't be able to tax the "wealthy" exclusively to pay for more social programs. Isn't that right comrades?

Besides, until our state government learns to add, it won't make a bit of difference where they get revenue from.

TAXES FIRST LEAVED ON ONLY WEALTH WHEN FIRST INTRODUCED IN THE UNITED SNAKES.

[Existenz]

Another horrible right wing idea from the Governor. If we want to get this state back on track, we won't do it by cutting taxes for the wealthy and hiking them for the middle class.

We need to repeal Prop. 13, eliminate term limits (which prevent us from having anyone with experience in Sacramento), eliminate the 2/3rds rule, and get these insane propositions under control. Right now a majority vote can dedicate billions to projects without any way to pay for it.

[From S.LA]

If I say this is racist or classist in some way, I'm going to be labeled a liberal radical and everything I say will be ignored... especially since this will tax EVERYONE EQUALLY! How much less racist and classist can you get with EQUALITY in place right???

But really...

Who is going to lose out on this? The wealthy who won't be able to afford that extravagant vacation and who will have to cut back to a smaller more local vacation or the poor who will leave their car (if they have one) sitting on their driveway and buy a bus pass to commute 3 hours to work leaving their older child (9 yrs old) to parent their younger siblings until they get home around 9-10p???

I really think we need to re-visit these terms of equality, equal, and really take a look at politics related to race, gender, and class in order to truly understand the disparities that exist today. Only then, can we truly understand how these seemingly neutral things really do affect us DIFFERENTLY.

Let's be a more critical people!!! Only then will we be able to look at these type of situations and be able to make a better decision in terms of who has more, who can stand to "lose" more, and what will TRULY contribute to reducing these deficits.

[Gorki]

I might consider same but only if other taxes were rescinded. Not more of the same.

[Christian]

Its a good idea. Relying on the wealthy is obvioulsy significantly unreliable 1) they move 2) shelter income 3) stop having income completely to minimize taxes by living off wealth. FLAT taxes taxes you when you buy things as well. Its a great way to stablize tax revnues and not burden one class of society unfairly - I'm sure someone feels like no one should be rich - we tried that and the USSR failed. LIFE ISN'T FAIR! The rich should not be polite in hiding their income or leaving like they have done in NYC and Maryland. People aren't pollite in demanding money from the successfuil so screw em. But the flat tax is the fairest system as the point of sale is where no one can run from and its reasonable enough for people to not leave the system.