Coyote Blog

My vote:  mandatory income tax withholding.  Taxpayers never see most of the money they pay the Feds.   They don't have the shock of seeing the amount of money going to the government in one big check.  Since most formulas lead to over-withholding, people are actually eager to file their tax returns to get refunded the money that was withheld in excess of liability (e.g. interest-free loan to government).  Employers, who live in fear of violating one of a hundred thousand different labor rules, are more than willing to withhold whatever the government asks - they certainly aren't going to stand in front of the tanks to protect their employees' money.

California is taking this law to the next logical level of abuse:  Increasing the interest-free loan that citizens must give the state.  If free credit markets won't lend you money at a rate you can afford, force your citizens to lend it for free:

Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners "” holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.

Technically, it's not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers' annual tax bills won't change.

Think of it as a forced, interest-free loan: You'll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.

I am starting to feel a sort of anti-irredentism for California.