All states are suffering for a budgetary shortfall….why?….basically they have given away all revenue to business and now needs to find ways to extend their income……good plan, but who will pay and who will benefit?

Well, California seems to have an idea as reported by the LA Times:

The most obvious thing about the big, complicated tax reform scheme that will go to the Legislature this week is that millionaires would save an average of $109,000 a year. Taxpayers making between $40,000 and $50,000 would save $4. This is not a typo.

The plan, still awaiting a final draft, is the work of the grandly named California Commission on the 21st Century Economy, which held its final official meeting last Monday. But it’s been clear from the beginning that Gov. Arnold Schwarzenegger, in setting it up last fall, was aiming to do precisely that: enact big cuts for upper-income taxpayers and create what’s become a pea-under-the-shelltax system to make up the lost revenue.

Under the commission’s BNRT proposal, all California businesses would pay a tax, probably about 4%, on their net receipts, which would be calculated by subtracting the cost of the goods they’ve purchased from their gross receipts. That makes it roughly like a VAT, the value-added tax used in most of Europe, but not similar enough to be comparable. Under the BNRT, there would be no deduction for labor costs, not even for employee health plans.

That element alone creates incentives for firms to purchase parts from abroad and, depending on how the courts rule on a string of unsettled legal issues regarding taxation of out-of-state entities, maybe even from Oregon or New York, rather than making them with their own workers in California. “It appears to be a tax on employees,” wrote the state Chamber of Commerce and other groups. And because the tax is built into the price of California goods and services, it also could make them less competitive in other states and abroad.

Something to watch…..even though some states have found alternate avenues to gain revenue, this, if it passes, could be the future for other states that are in sad need of revenue.

My state is scrambling around trying to find new sources of revenue without hitting business……business is the life blood of the politicians of my state and the bane of the workers.  Anything they could do to drop the bulk of revenue responsibility onto the worker the better….business will never be asked to shoulder any responsibility.