Experts Praise State Dems' Tax Plan
Professor Joseph Bankman is quoted in the San Francisco Chronicle on the Democrat's budget plan to solve California's $19 billion deficit. Wyatt Buchanan reports:
A budget plan pushed by Democrats in the Legislature to solve California's $19 billion deficit would hit some middle-income residents with tax increases, the Legislative Analyst's Office said Wednesday, but it would benefit shoppers, retailers and auto dealers.
The Democratic plan would increase personal income tax rates and the vehicle licensing fee while slashing the state sales tax nearly in half. Tax experts told a Senate committee it was a good idea.
"It's a smart proposal that brings in billions at little or no cost to California," said Joseph Bankman, a professor of law and business at Stanford Law School. "So, when you actually can find something for nothing it's probably a good idea to take it."
Bankman was referring to the fact that people who itemize tax returns can deduct state income taxes and vehicle license fees from their federal income taxes. That means the federal government would essentially credit many Californians for the increased state taxes. Sales taxes are not deductible.