Ready" Tax Return Pilot Program Flawed

The Libertarian Party of California opposes Controller Steve Westly's plan to have the state do the personal income tax returns for three to five million Californians

Sacramento, CA (PRWEB) March 10, 2005 -- For the first eighty-five years of California's existence as a state it survived without a personal income tax. In the seventy years since 1935, with the advent of compulsory payroll withholding and other enhancements, the state income tax has grown from absolutely nothing to the monumental sum of $43.5 billion dollars a year (according to the Governor's budget projection for 2005-2006). California Controller Steve Westly, Democrat, and some academics, have a plan for the next step in this evolution: the state will prepare your tax return for you.

Libertarians in California are adamantly opposed to the 'Ready Return' program," says Aaron Starr, chairman of the Libertarian Party of California. If the state fills out your 540 form for you, do you think your taxes are more likely to go 'up', or go 'down'?" asks Starr, rhetorically.

In reply, Mark Whitney, at-large representative to the Libertarian Party of California's Executive Committee, reasons, When payroll withholding was started, paying taxes became easier, and taxes went up. If taxpayers are not even responsible for figuring out their tax liability, I expect taxes will go up even more."

In a $200,000 pilot program, Westly hopes to find 10,000 volunteers willing to test if the plan would ultimately be workable for an estimated three million taxpayers having just one job, no dependents, and no tax credits or itemized deductions. Another two million could later be brought in whose only additional source of income is bank interest.

Unfortunately, the state already has all the private financial information needed to determine many people's gross income," said Starr. However, they have little idea, nor is it their legal responsibility, to know if a person has any valid exemptions. The only possible outcome is that many of the so-called 'ready returns' will overstate, and few will understate, the individuals tax liability. Some of those that receive incorrect 'ready returns' will feel compelled to send in the money the state 'officially' requested."

Adds Whitney, The expression 'letting the fox guard the hen house' comes to mind. Somebody you trust, such as yourself or a good CPA, should do your taxes, not those responsible for maximizing state revenue."

Not only Libertarians are opposed to this plan. Nearly half the Assembly have signed a letter to the Franchise Tax Board saying the initiative, which was launched without lawmakers' consent, is a dangerous precedent".

The response on the Internet is running almost entirely against Ready Return. One echoes Whitney's concern, I want simpler taxes, lower taxes even, but I do not want the wolf telling me how many chickens it needs." Another says, It's the ultimate short form: 'How much did you make last year? Send it all to us!'". And another, I'll continue to do my own taxes, thank you very much." There was even a post in French inspired by the Ready Return program from a poster in Quebec lamenting the loss of financial privacy with respect to governments.

Whitney points out, Simplifying taxes is not primarily a matter of computer automation, as Controller Westly seems to think. To really simplify people's taxes, the state and federal governments need to stop using the tax system for social engineering."

Concludes Starr, Even if Westly has good intentions, his plan is a bad one. A Libertarian controller would never have conceived or wasted $200,000 on a program like Ready Return that slides the state further down the slippery slope to higher taxes and bigger government."

About the Libertarian Party of California:

The Libertarian Party of California has elected more than fifty public officeholders statewide. Libertarians believe in personal freedom in both social and economic spheres, and in government small enough to protect those freedoms.

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