California Pension Tax Proposition (2010)

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A California Pension Tax Initiative (09-0006) was intended for but will not be on the 2010 state ballot as an initiated state statute.[1]

The measure would have taxed California public employees who draw a pension from the state of more than $40,000/year. If enacted, the California Legislative Analyst's Office indicates the measure would raise $6 billion to $8 billion in new taxes.[1]

Paul McCauley is the potential initiative's official proponent.

A brief summary of the proposed initiative is "Imposes additional, annual taxes on California residents who receive income in excess of $40,000 from pension distributions, social security, and the cash value of health care benefits. May impose a one-time, additional tax on non-California residents whose pension benefits exceed $50,000 in a year, and who earned income in California. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Annual state revenue increases of up to $6 billion to $8 billion beginning in 2010 from new taxes on pension benefits. Revenues likely would decline over time due to changes in behavior."

433,971 valid signatures of California registered voters will be required to qualify the measure for the ballot.

Illegal?

The California Legislative Analyst's Office has indicated that there may be legal problems with the initiative as it is currently worded.[2]

The LAO writes:

"The measure raises legal issues that could result in the excise tax being invalidated under federal law. According to FTB, states are prohibited from imposing an income tax on the retirement income (from an in-state employer) of a nonresident. While the proposed excise tax is not technically a tax on current income, the outcome is similar (especially since this measure allows the excise tax to be paid over time). As a result, the excise tax may not survive a legal challenge. In that case, the annual revenue estimate would drop by $1 billion to $3 billion."[3]

See also

External links

References

  1. ↑ 1.0 1.1 Sacramento Bee, "Public pension crusader returns with new ballot initiative", May 22, 2009
  2. ↑ Sacramento Bee, "LAO: McCauley pension tax proposition may be illegal", June 12, 2009
  3. ↑ LAO analysis of the Pension Tax Proposition, 09-0006

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