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bcspace wrote:http://cnsnews.com/news/article/sandy-ravaged-new-jersey-families-face-6933-tax-hike-fiscal-cliff-stalemate

You wanted it, you got it. Just don't say you didn't make it.

bcspace wrote:http://cnsnews.com/news/article/sandy-ravaged-new-jersey-families-face-6933-tax-hike-fiscal-cliff-stalemate

You wanted it, you got it. Just don't say you didn't make it.

Prop. 30 to deliver hefty tax hike to state's high earners next year

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For California's high-income earners, next year's tax bill could be a bit of an eye-opener.

That's because, amid all the dire debate in Washington, D.C., about the "fiscal cliff," the impact of another tax issue closer to home has been largely overlooked: Proposition 30.

"What's amazing is how few people are talking about it," said Kevin Young, a certified financial planner in Davis. "It's partly because it only impacts a few people."

For most of us, Proposition 30 means only one thing: a quarter-cent bump in the state's sales tax. Even on a big purchase like a $600 flat-screen TV, that's only an extra $1.50.

But California's high-income earners – those making more than $250,000 a year – will see their personal income tax rates jump anywhere from one to three percentage points.

The new taxes, which are retroactive to Jan. 1 of this year, will be owed on April's state income tax forms.

For single taxpayers with taxable income of $300,000, it will mean an extra $500 in taxes, according to state Franchise Tax Board calculations. That's on top of the $25,503 they would have paid had Proposition 30 not passed. For a married couple filing jointly who pull in $600,000, it's an extra $1,000 in state income taxes, the FTB determined. That's added to their current tax bill of roughly $51,000. Their tax rate would notch up one percentage point to 10.3 percent.

And for the sliver of Californians who make more than $1 million, their new tax rate hits 13.3 percent, almost a 30 percent rate hike above their current rate. Those increases come amid a dizzying array of new taxes, from local to federal. The result is a taxable landscape that's a crowded, confusing place.

"The reaction from my clients affected by the changes is frustration and concern," said Gregory Burke, a CPA with John Waddell & Co. in Sacramento. "It's incredibly confusing for taxpayers. Not only do we have the state changes, we have tremendous uncertainty regarding federal taxes for 2013," on everything from dividends to estate taxes.

All the new tax rates and withholding tables are available at http://www.taxes.ca.gov.

The November ballot ushered in additional tax hikes for Sacramento residents. Voters approved a measure to add another half cent to the city's sales tax, bringing it to 8.5 percent. Sacramentans also approved two school bond measures, which will add about $108 to property taxes on a $200,000 house.

More dramatic tax hikes lurk on the federal level unless Congress and President Barack Obama can agree on a plan to avert the "fiscal cliff" at the end of 2012, when a number of Bush-era tax cuts expire. These would include a jump in income taxes, estate taxes and taxes on stock dividends. Separately, starting in January, two new federal taxes kick in to help pay for health care costs under the Affordable Care Act.

In a state where the median income is roughly $61,000, no one is feeling particularly sorry for its biggest earners. But those individuals would certainly feel the impact of the "double-whammy" of state and federal tax hits. Obama is pressing Congress to approve increasing taxes on high-wage earners to help address the federal budget deficit.

"It's somewhat disheartening when you're depicted as being greedy," said Roger Valine, former CEO of Vision Service Plan, an eye care benefits company, who's now a business consultant.

"In reality, you're paying a higher percentage of taxes and you're paying a bigger amount of taxes because your base is bigger," Valine said.

Personally, he says, the bigger tax bite ushered in by Proposition 30 and other tax changes won't drastically change his lifestyle. But he does worry about its impact on the state's business climate, both for small entrepreneurs and bigger corporate firms.

"I think the real issue is what this will do to our economy and the desire, or lack thereof, for small or large companies to stay in California," he said.

Whether the tax flurry will have any effect on spending by high-income earners is unknown.

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