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Nov 2 2009, 2:52 pm by Megan McArdle

California's Tax Games

California has come up with a novel way to close this year's budget gaps:  it's increasing withholding from the paychecks of its citizens.  No, the government didn't actually increase taxes; it just raised the withholding.  They'll give any extra funds back to taxpayers in April, and presumably fewer people will have to write checks to the government on April 15th.

This is a terrible idea on many levels.  First of all, the government should not be taking forcible loans from its citizens.  Second of all, the fix is extraordinarily short term--people can start filing for refunds in four months.  What are they going to do for an encore?  Maybe, instead of raising taxes, governments can just start ritually raising the withholding regime every year, then mailing a check back at the end of the year, only to withhold even more the next time . . .

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Comments (2)

mgoodfel

The new state motto: "Pay up or we'll close your parks!"

Paul in Athens

Didn't CA withhold refunds this past spring? Well, not "withhold, as in "withhold", but keep them longer. Not sending them out as quickly, or threatening to send out vouchers instead? Seems I remember something along that line.

In any event, do you know how easy it is to change your withholding at work?