5

Cyber Monday spree? You owe ‘use tax.’

Finding some awesome holiday gift deals on this Cyber Monday? They may not be quite as awesome as you think, Californians: You owe taxes on those purchases.

California law imposes tax not only on in-state purchases, but also on items bought out-of-state for use in California; this “use tax” has been law since 1935, to prevent out-of-state retailers from having a competitive advantage over California-based vendors who were required to report sales tax beginning in 1933. And the advent of online shopping hasn’t changed anything.

So if an out-of-state or online retailer doesn’t collect this tax for an item delivered to California, it’s the purchaser’s duty to pay it, based on the tax rate for the area in which they live.

There are two ways to pay any use tax you may owe: Register and pay on the state’s eReg website after each purchase; or pay it as a line item on your state income taxes, using the Board of Equalization’s and the Franchise Tax Board’s use-tax calculation based on your adjusted gross income.

The average California family owes about $61 in use tax each year, and the Board of Equalization estimates that California consumers and businesses failing to report and pay the use tax they owe costs the state more than $1.1 billion a year. Like sales tax, this money helps fund programs such as public education, public safety, and transportation.

8

Initiative to fund higher ed cleared for circulation

The proponent of a proposed ballot initiative that would hike various taxes to fund California’s public universities and community colleges has been cleared to start collecting petition signatures, Secretary of State Debra Bowen said Monday.

Here’s the official title and summary prepared by the state attorney general’s office:

TAXES TO FUND CALIFORNIA PUBLIC UNIVERSITIES AND COMMUNITY COLLEGES. INITIATIVE CONSTITUTIONAL AMENDMENT AND STATUTE. Imposes new taxes on gasoline and diesel fuel ($0.025 per gallon), alcohol ($0.05-$1.65 per gallon), and cigarettes ($0.0125 each); raises vehicle license fees by 0.5% of vehicle market value. Allocates new revenues 80% to University of California and California State University, 20% to California Community Colleges. Maintains state funding for higher education at or above 2009-2010 levels and student financial aid at or above 2010-2011 levels. Caps student tuition and systemwide fees at 2009-2010 levels. Creates joint commission to recommend cost efficiencies in higher education. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Additional state tax revenues from increases in various taxes of about $2.2 billion annually that would be dedicated to public universities and colleges. Depending on whether the new state tax revenues are sufficient to replace lost tuition and fee revenues (due to lower student tuition and fee levels), unknown effect on total funding for public universities and colleges. Depending on whether the new state tax revenues are sufficient to satisfy increased state spending requirements on public universities and colleges, unknown effects on other parts of the state budget and the state General Fund. (12-0015.)

Proponent Jesse Lucas – the California State University-Los Angeles Associated Students’ Legislative Affairs Committee Student-at-Large – must collect at least 807,615 valid signatures from California registered voters by April 15 in order to qualify this for the ballot in November 2014.

7

Peering ahead toward the ‘fiscal cliff’

President Obama today announced he has invited congressional leaders from both sides of the aisle to come to the White House next week to discuss how to handle the tax increases and spending cuts now scheduled to take effect automatically in January.

House Speaker John Boehner, R-Ohio, responded:

John Boehner“The year 2013 should be the year we begin to solve our country’s debt problem through entitlement reform and a new tax code with fewer loopholes and lower rates. The president has an historic opportunity to lead both parties in forging an agreement that averts the fiscal cliff in a manner that ensures 2013 will be that year.

“The increased tax rates that would be allowed under the Senate-passed bill are part of the fiscal cliff that economists are warning us to avoid. Those increased tax rates will destroy jobs in America by hurting small businesses across the country. Republicans are eager to get to work on an agreement that averts the entire fiscal cliff. The House has passed legislation to accomplish this vital goal. We look forward to joining the president next week and working to forge an agreement that will do the same.”

House Minority Leader Nancy Pelosi, D-San Francisco, responded:

Nancy Pelosi “President Obama is exactly right: the American people voted on Tuesday for certainty for our economy and middle class families. Speaker Boehner and House Republicans can provide that certainty, and establish a sound basis for negotiations on comprehensive deficit reduction package, by taking up the Senate-passed bill to extend the middle income tax cuts. President Obama has his signing pen ready, and I am certain that, given the opportunity, Democrats in the House will vote to send the middle income tax cut to the President next week.

“President Obama reiterated today that we must work toward compromise to address our nation’s deficit, and we stand firmly on the side of a balanced approach. President Obama took this issue of tax fairness to the American people with great clarity, and the American people agreed with him. The wealthiest Americans must pay their fair share.

“The tax proposal that the President restated today is the right way to move forward, enabling us to start the conversation about a responsible, long-term deficit reduction plan. The President was clear in the campaign. The American people have spoken. Let’s sit down and get the job done. Every day we delay, adds to the uncertainty of the middle class. Let’s pass the Senate bill now and show the American people that people of goodwill can get the job done. We must.”

1

Yes on Prop. 39 pulls ads as opposition fades

The Yes on Prop. 39 campaign sort of declared victory today, announcing it would pull its television and radio ads after hearing that the companies once opposing the measure will do so no longer.

Proposition 39 would close a loophole for multi-state companies, requiring them to pay taxes based on sales in California rather than allowing them to choose how they are taxed. The state would realize about $1 billion more per year in revenue if the measure passes. Thomas Steyer, founder and co-senior managing partner of Farallon Capital Management, has put up $21.9 million to bankroll the measure.

And it looks as if it worked. The committee backing Prop. 39 today said it has been informed by General Motors, International Paper and Kimberly-Clark that they won’t oppose the measure any further. Chrysler and Procter & Gamble, the two other companies that once were part of a coalition opposed to closing the loophole, also recently stated that they would not oppose Proposition 39.

The California Business Roundtable tracking poll‘s latest numbers show Prop. 39 now has 63.1 percent support, its highest level in two months.

2

Cal researchers map political info via social media

Cal Berkeley researchers have launched a new website to explore how political knowledge can be spread rapidly across big populations using social media – and their test subject is one of this election season’s hottest issues.

The project, from UC’s CITRIS Data and Democracy Initiative, aims to develop a general-purpose system that can be used for a wide variety of issues, but for now it’s being tested on just one: Proposition 30, Gov. Jerry Brown’s tax-hike ballot measure.

Ken Goldberg, an engineering professor, said that “although the outcome of this vote has an enormous potential impact on students, alumni, teachers, parents and employers, many are not aware of Proposition 30. The California Proposition 30 Awareness Project aims to change that.”

Visitors to the website can learn about the ballot measure – a four-year, quarter-cent sales tax hike and a seven-year income tax hike for those making more than $250,000 per year – and receive a custom web link to share with whomever they please using email, Facebook or Twitter. They can return to the site later to see a unique graphic representation of their influence, and track their “influence score;” after the election, the website will list the 50 most influential people.

Influence is computed using a variant of the Kleinberg and Raghavan algorithm, where each visitor’s influence increases by one point for each person he or she recruits, by half a point for every person those people recruit, and so on. This model has been applied in many contexts with financial incentives, but researchers believe this is the first time it’s being tested with intangible rewards.

The researchers say the project and website emphasize awareness and are unbiased; the site includes links to the California Voters Guide and to campaigns on both sides of the issue. Visitors can also indicate their position for or against the proposition, and join an online discussion afterward.

18

Where does Mitt Romney’s 47 percent live?

The nation continues to mull Mother Jones’ scoop of Mitt Romney’s unguarded comments to a private fundraising event this past May in Florida:

“There are 47 percent of the people who will vote for the president no matter what. All right, there are 47 percent who are with him, who are dependent upon government, who believe that they are victims, who believe the government has a responsibility to care for them, who believe that they are entitled to health care, to food, to housing, to you-name-it. That that’s an entitlement. And the government should give it to them. And they will vote for this president no matter what…These are people who pay no income tax.”
[snip]
“[M]y job is is not to worry about those people. I’ll never convince them they should take personal responsibility and care for their lives.”

So where are those 47 percent of Americans who pay no income tax?

The Atlantic has the answer, with data from the Tax Foundation. In California, 37 percent of residents pay no income tax, but that only ranks us 16th among the states:


(click to enlarge)

As the Atlantic notes:

This measures only those Americans who filed for taxes with no liability. Millions more didn’t even file; it’s those millions, added to the estimated 52 million here, who combine to make that 47 percent.

It’s important to remember that just because people aren’t paying income tax doesn’t mean they’re not paying taxes — they pay federal payroll taxes and state and local sales taxes, for example. Once those taxes are factored in, the tax regime is basically flat. And the reason that most income tax nonpayers don’t pay is they simply don’t make enough income to qualify to pay. As one might expect, the map of states with the highest poverty levels resembles this map fairly closely.