How does one start a petition drive for a CA state “tax reform” in lieu of SALT caps?

[Coronita]

Does anyone know or have experience with starting a CA state tax “reform” petition? For example, recently there’s a petition to repeal gas taxes… How does one setup/start a similar tax relief petition?

As you already know, with the federal tax reform, folks in high cost states such as CA, NY, NJ are going to be seeing their federal taxes change with the cap on state and local tax (SALT) deductions.

What I would like to do is get some state representative to sponsor a CA state tax reform bill such that CA state and local governments expand state “charitable organizations” and provide a near dollar-for-dollar state tax credit for contributions to “qualified” charitable organizations.

So for example, if you owe $1000 in state taxes, but donate $1000 to a qualified charitable organization(s), you get a $1000 state tax credit and owe $0 in state taxes.

In effect, this would shift the tax deductions of CA tax payers from SALT deductions (which is currently limited to $10k with it and property taxes) to “charitable contributions”, which the federal tax code does not limit under both normal tax rate and (as an added bonus for folks that currently pay AMT taxes) does not get AMT limited (unlike SALT deductions which are also AMT limited)….

From CA state/local government perspective, they get relatively the same money, whether it’s from a direct tax payment or from charitable contributions. But as a CA tax payer, this would get around the SALT cap. This might even allow the CA state to have net positive than previously, because for example, if they offered a 80-90cents to $1 tax credit:donation, a CA state tax payer might still opt that option, because they end up making up the different in the federal taxes they save….

This concept is not out of the realm as possibilities, because as SK pointed out on another thread, some states such as Arizona already have similar ideas in place, although there’s a limit on the state tax credit…

2020 Arizona Tax Credit Limits

I’d like to bring this up to at least some of our state/local government officials, at least in principal….as a way of giving the finger to some parts of the tax reform…..

[SK in CV]

I think you skipped a step in your explanation. The qualifying charitable organizations should be organizations that are already getting state funding. Like schools. Arizona has some that aren’t currently funded by the state (like private schools, whose funding I personally strongly oppose, and would hate to see California include them in qualifying organizations). But most of the organizations are things the state is either already funding or reasonably could fund. I do not know whether the state reduces funding based on the amount of direct contributions, but there are some credits that are limited in total dollar amount.

[Coronita]

[quote=SK in CV]I think you skipped a step in your explanation. The qualifying charitable organizations should be organizations that are already getting state funding. Like schools. Arizona has some that aren’t currently funded by the state (like private schools, whose funding I personally strongly oppose, and would hate to see California include them in qualifying organizations). But most of the organizations are things the state is either already funding or reasonably could fund. I do not know whether the state reduces funding based on the amount of direct contributions, but there are some credits that are limited in total dollar amount.[/quote]

Fair enough…. Anyway, this is just a big game….Consider it a hobby, outside of when I’m driving. I just think it’s interesting how people’s fortunes can change simply by a few line item changes.

A few weeks ago, a few folks bent out of shape concerning the tax reform was pondering could could the state strike back at these tax reforms….

In principle, here’s a strategy that might work. Where are all you folks that want to effect change and want CA to screw the fed back? Are you going to help ask our state representatives to do something? SK is in Arizona, so his state already does something about it… He’s excused 🙂

[SK in CV]

If I was a state legislator, I wouldn’t frame it as screwing the fed. It’s benefitting the taxpayers of California without costing the state any revenue, or costing any currently funded organization. Taxpayers who are tax aware can save some money. Tax advisors score.

[spdrun]

How to make sure that the money donated to charity is distributed equitably? What if United Way gets 90% of the donations and ends up with money it can’t use, and Podunk Unified School District ends up with zippo squat?

Would “approved” charities have to spend their money in a specific way or in specific (and multiple) places to guarantee that it’s distributed throughout the state?

[SK in CV]

Give the money directly to the school district or even school. That’s how AZ does it. The tax credit form requires that you specify the school or school district. In fact, you can even specify the program within the school to get the funds. I send $400 (almost) directly to my niece’s classroom. She gets to have aids in her 16 kid, all non-verbal, special ed classroom because of the money she raises. I get credit exactly (for me anyway, there are limitations) like an estimated tax payment on my AZ return and a charitable deduction on my federal return.

[spdrun]

What if everyone donates to school districts in San Francisco but very few donate to districts in Stockton?

[outtamojo]

[quote=flu][quote=SK in CV]I think you skipped a step in your explanation. The qualifying charitable organizations should be organizations that are already getting state funding. Like schools. Arizona has some that aren’t currently funded by the state (like private schools, whose funding I personally strongly oppose, and would hate to see California include them in qualifying organizations). But most of the organizations are things the state is either already funding or reasonably could fund. I do not know whether the state reduces funding based on the amount of direct contributions, but there are some credits that are limited in total dollar amount.[/quote]

Fair enough…. Anyway, this is just a big game….Consider it a hobby, outside of when I’m driving. I just think it’s interesting how people’s fortunes can change simply by a few line item changes.

A few weeks ago, a few folks bent out of shape concerning the tax reform was pondering could could the state strike back at these tax reforms….

In principle, here’s a strategy that might work. Where are all you folks that want to effect change and want CA to screw the fed back? Are you going to help ask our state representatives to do something? SK is in Arizona, so his state already does something about it… He’s excused :)[/quote]

Imo the best way to screw back is to get folks more riled up about their lies and vote them out of office #whereismyraise

[livinincali]

[quote=spdrun]What if everyone donates to school districts in San Francisco but very few donate to districts in Stockton?[/quote]

That’s why the credits would need to be limited to some dollar amount like Arizona does. Obviously the state still needs to receive money and allocate to various programs and services throughout the state. It could never function if everyone were allowed to dictate what their tax dollars are used for. At best maybe you could convert 10% of the states income tax revenue into charitable contributions for federal tax purposes before you start running into problems.

I just don’t really see the path that high cost of living/high tax state can take to to relieve the sting of this tax bill. It you were itemizing your taxes because of high state tax and mortgage interest deduction and you weren’t already in AMT land you’re getting monkey hammered by this. If you weren’t then it’s marginally better.

In summary upper middle income tax payers in the West and Northeast are getting hosed to give the average middle income american $50-100 extra per month. The corporate tax breaks are going to add $150 billion a year in deficits.

The reality was that upper income tax payers are where the money is so any tax reform was going to hit them the hardest. Under a Clinton presidency maybe the truly wealthy wouldn’t have gotten as much of a break and the middle class american might has gotten more, but there’ no way upper middle income taxpayers weren’t going to pay for it in the end.

[Coronita]

[quote=SK in CV]If I was a state legislator, I wouldn’t frame it as screwing the fed. It’s benefitting the taxpayers of California without costing the state any revenue, or costing any currently funded organization. Taxpayers who are tax aware can save some money. Tax advisors score.[/quote]

Yes! Exactly.. it’s all is how the message is delivered. You don’t want to be directly confrontational with the fed.

[Coronita]

[quote=SK in CV]Give the money directly to the school district or even school. That’s how AZ does it. The tax credit form requires that you specify the school or school district. In fact, you can even specify the program within the school to get the funds. I send $400 (almost) directly to my niece’s classroom. She gets to have aids in her 16 kid, all non-verbal, special ed classroom because of the money she raises. I get credit exactly (for me anyway, there are limitations) like an estimated tax payment on my AZ return and a charitable deduction on my federal return.[/quote]

Another good point. I stopped donating directly to my school district’s general pool fund. I make my donations directly to the specific school’s science and grade teachers classroom, complete with receipt….need a new computer to run the latest simple machine tool? done…. Just make sure you get a nice receipt.

[Coronita]

Usually the school district then tries to adjust money from the general donation pool fund and gives more to the schools that have less contribution.

[scaredyclassic]

i cant figure out if im going to pay more tax. we get hit pretty hard by AMT and the,sample calculators dont acct for that.

on the bright side, if this,depresses real estate prices, maybe my kud will be better able to buy.

[Coronita]

Well, time to make my annual 529 contributions. Lol..m.

[Coronita]

Looks like some politicians have caught on…. We’ll see if it sticks next year.

http://beta.latimes.com/politics/essential/la-pol-ca-essential-politics-updates-california-senate-democrats-are-1513992780-htmlstory.html

De León, who also is running for U.S. Senate, said the state Senate is working with law professors at UCLA, UC Davis and the University of Chicago to develop the legislation.

Ideas being considered, according to a de León spokesman, include:

Reducing state personal income taxes through a tax credit program and offsetting that amount through payroll taxes.
Allowing individuals to make voluntary gifts to the state of California, which would be deductible as a charitable donation under federal law. The deduction for the donated amount would replace the state and local tax deduction.

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