Taxpayers' interest-free loans to government

Last week Californians began making a new, additional interest-free loan to their state government. If taxpayers are lucky, they’ll get the money back when they file their tax returns next spring. On the other hand, they may get an IOU if the state is short on cash, which happened last spring when the government ran out of taxpayers’ money to spend and couldn’t pay all its debts. Considering that forecasts show the state will run about a $7 billion budget deficit in the current fiscal year, IOUs look likely.

Either way, Californians should remember this much: They weren’t asked if they’d like to make an interest-free loan to the government, despite the fact it will cost middle-class families from $20 to $90 a month. If you flinched at the dollar amount, we sympathize. We’re paying it, too. And no, we weren’t asked our permission, either.
Many income tax payers already lend the government money without charging Sacramento — or Washington, D.C. — interest on the loan. The government does it by withholding more than is owed in income taxes from every paycheck. As a result, Californians on average got a $903 refund last year from Sacramento alone.

This year, the state decided to accelerate its borrowing from you to “help pay for its past spending mistakes,” as Republican Assemblyman Curt Hagman of Yorba Linda put it.

That’s why beginning Nov. 1 state government began seizing an additional 10 percent in state income tax withholding from paychecks in what Mr. Hagman describes as a “sneaky accounting maneuver.” The government financial wizards promise to return any of the money you don’t really owe. They just want it sooner to patch the holes in their budget.

Californians should be irked at this cash-grab by their public servants. The involuntary interest-free loan is being extracted on top of a 0.25-percent increase these same legislators approved for the state’s income tax rate, the nation’s highest. This, of course, leaves Californians less money to spend on themselves. But if they do manage to have a few bucks left to spend, they should know these same legislators also stuck them with the highest sales tax in the nation.

We see a disturbing uniformity here. It has to do with soaking Californians across the board to pay for profligate spending across the board in Sacramento. When will Californians say enough is enough?