The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: California sales tax prepayments Date:  4/4/2015  7:32 PM
Author:  ptheland Number:  122343 of 132639


It's taxes. Taxes and logic don't mix.

However, I would point out that California's fiscal year ends on June 30. And I'll also point out that the 2nd quarter sales tax prepayment scheme gets more of the taxes paid in by June 30.

Some might also point out that estimated income tax payments are also heavily biased towards payments before June 30.

Our esteemed and honorable state legislators have, on two different occasions, changed the laws to require more tax payments just before the end of the fiscal year. This has the effect of accelerating payments into an earlier fiscal year, increasing revenues for that year.

Now I don't know if it's coincidence or not, but it just so happens that these changes took place in years where balancing the state budget was exceedingly difficult. The republicrats didn't want to change spending and the demolicans didn't want to change taxes. So they compromised by doing neither and just accelerating payment of taxes that were already on the books.

Of course, like any kiting scheme, to keep the kite flying you have to keep accelerating the payments. It's just a one time bump to state revenues.

That's why after the first change (which happened to be the sales tax change) they had to go back to the well a second time for the income tax change. Nothing had changed since the first change: taxes didn't change, spending didn't change, positions didn't change. So the only change they could make that wasn't a change was to change the timing of payments.

Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us