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State to withhold 10 percent of paycheck

October 30, 2009 12:00:00 AM PDT
Starting next week, the state begins withholding another 10 percent in taxes, and the increase is indefinite.It's not what cash strapped Californians want to hear, especially with the holidays just around the corner.

Starting next week, the state of California will be withholding 10 percent more from your paychecks indefinitely.

It's part of the budget deal Governor Arnold Schwarzenegger and lawmakers agreed to, to help the state ease the financial crisis.

Struggling families say this is hardly the time.

"To take it from people's weekly, monthly paycheck is just another dig in what's already a bad economy," said Peter Haas, a loss prevention officer.

"It hurts a lot. I got two kids. That's 10 percent out of their mouths," said musician Ayatollah Feesibiallah.

When asked if he realized that the 10 percent cut will hurt many families who are already dealing with other pay cuts and reduced hours, H.D. Palmer of California Department of Finance said that it had to be done to prevent other worse cuts in the future.

"Without question, this is going to affect millions of taxpayers. That said, the alternative would have been higher taxes or deeper cuts in programs like education," said Palmer.

The state says this is not a tax increase because your overall tax liability does not change, and you'll get your money back when you file your income taxes.

In essence, you're lending a total of $1.7 billion to the state interest free.

The funny math angers state workers, who must already endure three unpaid furlough days a month.

"Car payments, house payments, childcare. It's just one more blow," listed state worker Gail Schurr.

You don't have to reach too far back in history to remember that California didn't have enough money to pay its bills earlier this year.

The state had to issue IOUs, even for some tax refunds.

"I filed my taxes on Jan. 29, and I got an IOU," said Nicole Alleyn.

With the state's financial future still unclear, no one can say you'll get your refund next year in a timely manner.

If you don't want to be subjected to the additional 10 percent, you can change your state withholding form at work. But you should ask your tax preparer if that's wise, because you might end up having to owe money to the state during tax time.


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