Contra Costa Taxpayers Association

The consumer price index (CPI) figure was released in August by the Bureau of Labor Statistics. These numbers are used to determine next year's tax bracket. Even though taxpayers will not start filing their 2013 tax returns until January 2014, tax year 2013 parameters are needed in advance of 2013 so that the IRS can produce instructions for 2013 income tax withholding, says Nick Kasprak, a programmer and analyst at the Tax Foundation.

Projecting the tax brackets is more complicated than normal given the uncertainty regarding the expiration of the Bush tax cuts as well as tax cuts in the stimulus bill. However, Kasprak projects next year's tax brackets under different scenarios with a high degree of certainty.

• If the Bush tax cuts expire, the tax rate for the lowest income bracket will be 15 percent and the rate for the highest income bracket will be 39.6 percent.
  
• However, if the Bush tax cuts are extended under H.R. 8, then the rate for the lowest income bracket will be 10 percent and the rate for the highest income bracket will be 35 percent.
  

But if Obama's 2013 budget gets approved, it would allow the Bush tax cuts to expire for only upper income payers.

• The rates for the lowest income bracket would be 10 percent whereas the highest earners would still have a tax rate of 39.6 percent.
  
• Head of Household filers in the second highest income bracket will have a tax rate of 36 percent compared to a 33 percent tax rate if the Bush tax cuts are extended.
  

H.R. 8, the proposal that would extend the Bush tax cuts and Obama's 2013 budget, takes different approaches to several taxes and deductions that are set to be patched or expired in the upcoming year.

• The personal exemption will rise by $100 to $3,900 regardless of what happened to the Bush tax cuts. However, for married filers, the standard deduction could decrease if the Bush tax cuts are extended.
  
• The Personal Exemption Phase-Out and PEASE (named for former Senator Donald Pease) are provisions that phase out tax benefits for upper income taxpayers. Both disappeared in 2010, however if the Bush tax cuts expire, both provisions would return next year.
  
• Finally, the Alternative Minimum Tax (AMT) would have an exemption at $50,600 for single filers and $79,850 for married filers if H.R. 8 passes. But Obama's budget would permanently index the AMT for inflation and set the exemption at $48,450 for single filers and $74,450 for married filers.
  

Source: Nick Kasprak, "Next Year's Tax Brackets," Tax Foundation, October 1, 2012; National Center for Policy Analysis.

GAS TAX

Just when you think you are taxed to the max, local politicians have another plan.  Many of these items have worthy goals (there are certainly exceptions), but local governments seem to be out of touch with California’s reality.  We have an unemployment/underemployment rate of 20.3%.  That makes us #2 in the nation, behind Nevada. We may be entering a second recession and adding these tax burdens (plus the state’s tax plans) most would say would not be a good thing for the economy.

Presumably Moraga and Orinda rushed  to get their sales taxes on the books before the Governor’s sales tax passes (if it does).  Pinole with the Utility Users Tax extension proves the old age that nothing is as permanent as a “temporary” tax.  Keep that in mind whenever a governmental entity brags about a “sunset” clause.  If there is no intention of a real sunset then they are just a stepping stone in the path to a permanent tax. In that regard, kudos to Moraga for saying they need their sales tax for 20 years to fix roads, but at the same time the authorization to incur debt to speed up projects………may or may not be a good thing - most people will miss that statement in the measure.

This is not a complete list, there is at least one bond measure for San Ramon Schools, but this gives everyone a heads up of what will be on the local ballots: Local Measures as of August 1 2012.docx

The Fire Protection District Board meets Tuesday to vote on a proposed $75 parcel tax.  However, the decision may have been made a year ago according to the document sent to Vince Wells of IAFF Local 2030 Representative. 

That document written by County Administrator David Twa (attached 7-28-11 Memo to Vince Wells.pdf) reads: "On behalf of the Contra Costa County Board of Supervisors, it is my understanding that the Board will make its best efforts to place a parcel tax proposal on the ballot prior to December 2012, relative to the Contra Costa Fire Protection District."

With both Stockton and now San Bernadino pushing off pension obligation bond debt - how will this impact the market for public bonds?  http://www.pensiontsunami.com/

While it is called a soda tax - it is not limited to soda (to anything that has a form of sugar in it) and it is handled as a business licesnse fee RICHMOND BUSINESS LICENSE FEE.pdf  that will be calculated on the amount of sugared beverages sold.  This makes it easier on the seller in that the many items that include sugar will not have to receive a special sku number or tracked individually. It would be a logistics nightmare for the seller.

From the perspective of the taxpayer - realistically even if you don't buy sugared drinks, the cost will likely be passed on to you rather than the actual purchaser of sugared drinks.  If the objective was to curb consumption of sugary drinks - this is not the way to go.

From: Harold Johnson, attorney, Pacific Legal Foundation     www.pacificlegal.org   (916) 419-7111

To: Taxpayer organizations that joined with PLF in defending Proposition 13

Re:  WE WON TODAY AT THE SECOND DISTRICT COURT OF APPEAL  --- see today’s court ruling attached to this email.

Dear friends,

Today, we all can celebrate a great victory in our joint battle to defend Prop. 13.Today – July 24 – we all can celebrate a great victory for our joint effort to defend Prop. 13.   

The California Second District Court of Appeal unanimously rejected the challenge to Prop. 13’s “supermajority” rule for new state taxes --- i.e. the rule that the Legislature can’t raise taxes without a two-thirds vote in both chambers.   This provision, of course, was added to the California Constitution by voters when they enacted Proposition 13 in 1978.    As you know, the lawsuit was filed by former UCLA Chancellor Charles Young, arguing that the two-thirds vote rule amounted to a “revision” that fundamentally changed the Constitution, not a mere amendment.   As the Second District notes in its decision (attached to this email), the California Supreme Court already upheld the entirely of Prop 13, in its Amador Valley ruling 34 years ago, against this same argument, i.e., that Prop 13 impermissibly “revised” the Constitution.  

On behalf of your taxpayer organizations, PLF submitted an amicus brief in opposition to Young’s arguments.   We pointed out that not only was Young’s lawsuit redundant and foreclosed in light of the 1978 Amador Valley ruling, but Young’s underlying argument was invalid in any case.   In fact, it is Young’s lawsuit that would impermissibly “revise” the Constitution.   Young sought to drastically shrink voters’ powers of initiative, particularly their clear, constitutionally recognized power to use the initiative process to protect themselves from higher taxes.     So, with this decision rejecting Young’s lawsuit, the Second District Court of Appeal upheld solid legal precedent, the integrity of the initiative process, and the electorate’s right to pull rank on the Legislature when it comes to important issues of taxation.  All in all, a good day’s work for this court.   

Thank you again for joining us in this important – and successful – effort to defend Prop. 13!

All the best,

Harold

Harold Johnson

Attorney

Pacific Legal Foundation

930 G Street

Sacramento, CA   95814

hej@pacificlegal.org

(916) 419-7111

fax (916) 419-7747

cell: (916) 267-3281

Voters in the County will be facing a brace of measures and more may be coming in addition to the long list from the state:

 - West Contra Costa Unified School district is looking for a bond AND a parcel tax

 -  ConFire will vote on a pacel tax amount on July 31

 - San Ramon school district has a bond measure

 - Pinole a UUT

 - Strangest of all is the advisory vote in Richmond on a business license "fee" for each ounce of sugary drinks sold.

Going to be a long and busy ballot!

A lot of publicity has gone to CalPERS and its pitiful 1% rate of return. CCCERA is using a 7.75 expected rate of return when for 2011 it earned 2.7%, the 5 year average is only 2.4%, and the 10 year average is 6.2%. Retaining that 7.75% rate of return will push more expenses to the governments in CCCERA including the county and ConFire. That will mean dollars that would go to services will be directed to pension payments.

Experts are saying this is an unrealistic rate of return but often political decisions get in the way of good finance choices. For example, CalPERS received a lot of pressure from cities and unions who did not want their rate of return reduced from 7.75% to 7.5% when their actuaries suggested an even lower number.  This is because it would increase the cost of the payments to CalPERS. However, realistically, so does only earning the 1% that CalPERS just earned. However, that cost recognition is further in the future. It is expensive to kick the can down then road but that is the choice that is being made. 

The Howard Jarvis Taxpayers Association released the following story:

"Sacramento – In a victory for the integrity of the ballot process, the Court of Appeal for the Third Appellate District issued an order to the Secretary of State, Deborah Bowen, to reverse her action giving Governor Brown's tax hike initiative preference in the ballot materials or to submit a brief justifying her actions by July 30th. Pursuant to AB 1499, Bowen gave Brown's initiative the highest available number (Prop 30) on the November ballot."

Read the rest at: http://www.hjta.org/press-releases/pr-court-appeal-orders-secretary-state-justify-manipulation-election-process