California tax code due for changes


According to Schwarzenegger, California depends too much on the state's top income earners to fill its coffers.

"The people that are paying income tax, the 1 percent are paying the 50 percent of the income tax, are relying heavily on Wall Street," Schwarzenegger said. "We all know Wall Street is always on a roller coaster ride."

As a result, the money is not ways there to fund classrooms, law enforcement and other vital government services.

Democratic Assembly Speaker Karen Bass has longed advocated a review of how things are taxed in California.

Many other states have already started taxing services like haircuts, sporting event tickets and car repairs.

The state Board of Equalization estimates Sacramento is missing out on $2.7 billion every year by not taxing services frequently taxed in other states.

"If you think about how the economy has changed from the beginning of the last century, you can imagine there's a lot of revenue that the state of California isn't even capturing," Bass said.

There is also all the merchandise Californians order on the Internet, free of sales tax - especially music. The Board of Equalization says the state is missing out on $1.3 billion from online purchases.

"Music, as it is, is pretty expensive, but I also think the government deserves kind of a cut," online shopper Daniel Han said. "It is online; it is business."

Taxpayer groups will be anxious to see what recommendations the commission will have when the report is due April 15. California ranks fourth in the nation for tax burdens per household.

"Obviously, what we don't want to do is tax more than we need to meet the spending needs of the state," National Tax Limitation Committee spokesperson Lew Uhler said.

There have been at least two tax review commissions set up under previous administrations, but because the economy always got better, those recommendations got swept aside.

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