A "Concerned Citizen" wants to know more details on how Prop. 30's retroactive change to income tax affects him. Will he be penalized for inaccurate withholdings?
I've received email from a few people concerned about what Prop. 30 means for them. Here's one that I'll share following Wednesday's post on "Prop. 30 has passed, but how do you pay retroactive taxes?"
What about individuals like myself who are high-income W2 wage earners and have their state income taxes withheld via each paycheck? I don’t pay quarterlys! I will have underreported with a possible penalty! Mr. Chamberlain didn’t address that! But my guess is that he will be so gracious and not charge a penalty. What if I don’t have that extra cash sitting around?
Jay Chamberlain got in touch with the Franchise Tax Board on this one, to make sure we had the right answer. Indeed, the same waiver without penalty applies to the withholding issue as it does for an estimated payment, Chamberlain said. When there's a law change that affects taxes within the same year, the state can waive the additional money that would go into that estimated payment without a penalty — along with the money that would go toward withholdings, Chamberlain said.
California Gov. Jerry Brown speaks in support of Prop. 30 at a rally of UCLA students on campus, Oct. 16, 2012
California’s voters avoided massive cuts to public education that would have gone into effect in January by approving Proposition 30, Governor Jerry Brown’s tax measure. Now the question is: when will the money show up?
The short answer is the income tax revenue on anyone who earns more than a $250 thousand dollars a year, plus the additional quarter-cent sales tax, will have a ripple effect on the different systems of public education.
For K-12 schools, not much may change in the short term because most districts assembled their budgets assuming that Prop 30 would pass.
But State Superintendent Tom Torlakson said the ability to maintain the status quo will stem “the chaos of waves of pink slips, of disruption, just demoralization of the teaching work force.”
A billion dollars in state funding would have disappeared from the budget as early of December, he said.
Justin Sullivan/Getty Images
Prop. 30 has passed, and if you make more than $250,000 your income tax will go up - we explain how that's paid. Sales tax will also rise in January.
Now that Prop. 30 has passed, here are some nuts and bolts you need to know about how your income taxes may change this year.
Prop. 30 will increase personal income tax for seven years on Californians earning more than $250,000. It will be implemented retroactively, starting Jan. 1, 2012. Those earning between $250,000 and $300,000 will pay 1 percent more. People making between $300,000 and $500,000 will pay 2 percent more, and people making more than $500,000 will pay 3 percent more in taxes.
But how do you pay retroactive taxes?
I spoke with Jay Chamberlain, chief of financial research at the California Department of Finance. He said that taxpayers, and particularly high-income earners, pay four estimated payments for each tax year. The next estimated payment is due on Jan. 15 for the 2012 tax year.
Cal State students woke up Wednesday to news that they'd get refunds on their fees because voters approved Prop. 30 at the polls.
Instead of tuition hikes, Cal State University students woke up to news that they'd receive refunds on their fees because voters approved Prop. 30 at the polls Tuesday, the California State Student Association said in a statement.
Prop. 30 passed with 54 percent of the vote. If it had not, the Cal State system would have been hit with a $250 million trigger cut and students would have experienced a $300 per year tuition increase, the loss of 5,500 course sections and limited fall 2013 enrollment, the student group said.
Instead, Cal State students will receive an "immediate tuition refund of $249" to maintain tuition at $5,472 a year, the student association said.
The California State Student Association - CSSA - amped up voter registration efforts this summer. It registered 31,372 new student voters on 23 campuses for this election. The organization also sponsored rallies, information sessions and debates.
Anna, left, dresses patriotically during the election night party at Grand Park. The event was put on by the Music Center, and went until 10 p.m.
My Inbox was full of statements from various educators Wednesday morning thanking voters for passing Prop. 30 with a 54 percent "yes" vote.
For details on what this means for schools and taxes, you can check out the sum-up of the Prop. 30 results I compiled in the wee hours Wednesday morning. The details on how California voted, especially geographically, remain the same. L.A. County appears to have greatly tipped the scales in favor of Prop. 30, with 60 percent voting in favor of the tax increase.
L.A. Unified Superintendent John Deasy put out a statement at about 6:30 a.m. saying he's "tremendously grateful" to voters for "making the difficult decision to support Prop. 30."
"It is apparent that the voters are aware of the devastating cuts schools districts have taken the past 5 years. They have said enough is enough. These funds, from Proposition 30, will better equip us to provide a quality education to all LAUSD youth over the next several years and begin the road back to fiscal recovery. We look forward in the next several years to begin to restore some of the programs and valued employees, which were previously cut by the devastating fiscal situation in California.
At the same time, I speak for all employees of LAUSD when I say we will continue to work tirelessly to ensure that every student graduates college and career ready. And I also thank all employees and youth who worked so hard to support Proposition 30, and acknowledge the very tough times we have been through as one family, and now see a bridge forward to a more stable financial future that honors all your hard work."