Do I risk any penalty for increasing my exemptions? Currently i have 2 exemptions on my W-4 and would like to add a third for CA state taxes.

I would rather slightly underpay my taxes and send the state a check in April.

thanks,
Mark

Monte Meals: Are there any guarantees that an April 15 tax refund will be paid in US dollars as opposed to California IOUs?

Yes. Those guarantees are written on the back of this past year’s Califonia IOUs.

Nick

Struthius: Struthius says:
FSM? Federated States of Micronesia? Film Score Monthly? Flying Spaghetti Monster? Free Speech Movement?
There probably are few Californians in Micronesia, so I’m betting that’s it.

Flying Spaghetti Monster, since as an atheist I cannot thank god.

great unknown: bystander:It is an article of faith of the left that most if not all successful people owe their success to the State.And owe, and owe, and owe…

Haha, I had not considered that. As a not-yet-successful Californian, I wish Dr. Bowman luck and encourage other professional Californians to do the same. My own exit is approaching (after taking advantage of public K-12 and a public university), and I look forward to the day that I can be called a “free-rider” as well.

I adjusted my withholding on the advise of a professor and I hope many other tax payers do the same. It isn’t necessarily the interest-free loan that bothers me, but rather the fact that they have the audacity to ask for more after being wasteful (in my opinion) with what they have already collected.

It is an article of faith of the left that most if not all successful people owe their success to the State. And owe, and owe, and owe…

gab:And I’m sure Dr Bowman, who most likely benefitted quite handsomely by freeriding on the Calif taxpayer can speak for himself.

Gab, Dr. Bowman’s post stated that he was born and raised in California. I am sure that his parents paid taxes, so I hardly think he was a freerider. Do you expect him to remain in California for the rest of his life to repay the state?

And I’m sure Dr Bowman, who most likely benefitted quite handsomely by freeriding on the Calif taxpayer can speak for himself.

Folks who are anticipating return IOUs could at least let the state give themselves an IOU while significantly reducing their own withholding and estimated tax payments in 2010.

As an aside, although some employers may not provide the W-4/CA-4 to the IRS, many do. If yours is one of them, the old saw is to claim no more than 9 exemptions — 10 or more was said to be the magic number to trigger an audit. Of course, 9 is a hell of lot better than, say, 2, which is what my wife and I had claimed before.

My California tax refund this year was in the form of an IOU, and I’m expecting the same will happen in 2010. So at least I’ll have increased cash-flow in the meantime to make up for it.

It depresses me to acknowledge, but the experiences here are a lesson in the folly of public choice — when given the power to broadly set policy, Californians made policy that spends more than they are willing to pay. I still have no doubt that The People deserve to make a choice, but someone has to map that choice onto a realizable policy.

a) This argument echoes the one that says we’ll have to reduce essential services first. Has anyone actually done an analysis of how much money is spent on mandated and generally-accepted-as-necessary programs vs how much is spent on makework, pork, and illegal immigrants ?

b) How much money in necessary and mandated programs is spent on union- and politician-driven featherbedding? Pensions? Or outright fraud [which might be a redundancy]?

c) How much prison/police/prosecutorial/judicial expenses [including number of personnel needed] go down the rat-hole of the war on drugs? At the very least, how much money would be saved by fully legalizing marijuana and granting retroactive pardons to those already convicted of marijuana-related crimes?

Until I see evidence to the contrary, my personal opinion remains that significant amounts of the California budget go to items like a half-dozen redundant administrators telling a worker playing computer games at his desk to prepare a list of firefighters to lay off to reduce the budget, then give said worker a raise so that he can retire with a pension of 110% of his average salary.

As an aside, I am always struck that financial crisis seems correlated with the size of a government. Small towns seem to handle variations in revenue with much less drama – maybe in a lean year they keep the old backhoe running another year or whatever, and replace it in a good year, all seemingly without much gnashing of teeth (admittedly, I only have knowledge of the few small towns I have lived in).

Put another way, the “revenue acceleration” seems to give taxpayers a claim against the state for taxes collected in excess of what are owed. But if that claim is not payable because the state lacks the funds (or chooses to prioritize those refund payments lower than other payments that eat up the entire budget), how is that not a tax increase by another name?

And does anyone really think that the California legislature is going to prioritize claims disproportionately held by the hated “rich”?

Last tax year, California was not able to pay refunds for over 8 months after they were due. Unless they’ve got a rabbit in the hat, this tax year will be worse. The real wildcard is whether the banks will cash the refund IOUs this year.

The argument about short-term interest rates is missing the point. If people have to borrow because of reduced cash flow, the interest rates are much higher. Of course, if they reduce spending consequent to the aforementioned reduced cash flow, tax collections will suffer and the entire exercise collapses under the inexorable weight of the laws of economics.

But the individuals can borrow much more cheaply than the State, whose bonds hover in the 8-10% “junk” category. Those people have a very solid future earning potential against which to borrow whereas the State legislature can neither raise taxes nor cut the vast swaths of spending mandated by referendum.

It depresses me to acknowledge, but the experiences here are a lesson in the folly of public choice — when given the power to broadly set policy, Californians made policy that spends more than they are willing to pay. I still have no doubt that The People deserve to make a choice, but someone has to map that choice onto a realizable policy.

Of course, the nature of that mapping is highly unclear to me.

The argument about short-term interest rates is missing the point. If people have to borrow because of reduced cash flow, the interest rates are much higher. Of course, if they reduce spending consequent to the aforementioned reduced cash flow, tax collections will suffer and the entire exercise collapses under the inexorable weight of the laws of economics.

The implied criticism of Dr Bowman is predicated on his coming in from out of state, using the facilities of the public schools as a freeloader, and then escaping without paying back. The more likely scenario is that he and/or his parents shouldered a disproportionate amount of his educational bill in many years of taxes and fees.
It is worth noting that until recently, California, through its citizens, paid its own way.

Recall Dame Thatcher’s aphorism to the effect that one can be liberal until one runs out of other peoples’ money. By its taxation policies, driven by a buy votes – particularly of the unions – with benefits policy, CA has succeeded in driving industry and higher-level taxpayers out of the state. Once again, classic economics trumps Marx and his ilk.

For a ground-up look at this process in action, pay particular attention to Washington State. Boeing just declared that its new 737 production line will be in South Carolina. This is a blow to the Washington economy that could have been foreseen by anybody with an honest appreciation of economic reality. It remains to be seen if the Washington legislators learn from this mistake, or enter into a tighter graveyard spiral of compensating by raising taxes on remaining industry

A tax increase in California requires a 2/3 supermajority by constitutional amendment. The remedy via the voting booth was indeed invoked.

Unfortunately, like most legislative bodies, the California government is seeking to circumvent the results of the voting booth instead of taking proper corrective measures (cut pork, roll back absurd pensions…)that are within their powers, but might cause the politicians to lose said powers.

If this law truly conflicts with other provisions, one attempts to harmonize, and if one can’t the last thing the legislature enacted controls. Earlier statutes can’t be obstacles to later ones; the business of a legislature is to change the law.

A legislature has power to do this. One can grouse, but there really doesn’t seem to be any real beef. Since it’s backed by a statute, any remedy is at the voting booth. Frankly, given the dire straits most state budgets are in and California’s in particular, the hit could have been a lot worse.

Brian G.: It appears to me that people are advocating lawbreaking here by saying people should be changing their W-2s.California has every right to collect the revenue it desparately needs to continue to help women, children, and minorities who depend on the state to proivde them with a social safety net.I think it would be against the priniciples of social justice for people to decide not to assist California in its time of need.We are in a recesion people, thanks to Bush’s bankrupting of the country in order to make his pals at Haliburton, Big Oil, and Wall Street rich.As the biggest state in the country, naturally the devestation left behind by the Bush Regime hits them the hardest.People should show compassion for their fellows peoples and do their part to assist get past this crisis.

Just what law are you breaking when you are just paying the taxes you owe? If your tax payments are insufficient to pay the taxes owed (with a 10% leeway relative to last year’s taxes) then you may pay a penalty for underpayment. Not much to comment on past this except to ask if you live in CA and possibly if you’re tongue in cheek here.