CAHU Healthy Solutions

Operation Drumbeat

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Your Assemblymember.

Subject:
Letter:	I oppose the 3% withholding on independent contractors of which I am one for the following reasons: • Even if I owe no taxes, 3 percent will still be withheld. In this economic downturn every dollar is critical to me to keep my business running. • The state will use my money-interest-free-until tax return time. Refunds from the state are not subject to any deadline nor do I get paid interest. Last year, the state had to give IOUs. IOUs cannot be used to make payroll. • The revenue generated by this proposal is not new; the collection is merely accelerated. You have already speeded collections so that 70 percent of my tax liability is collected in the first six months of the year now you want to take more of my cash flow. • Independent contractor withholding will impose new costs on the 90 percent of responsible businesses that are in compliance with tax laws and I am one of those in compliance. Those that are not currently in compliance will in all probability remain out of compliance. Why should I have to pay for the 10% who will not pay? • This proposal will make me a state tax collector without pay. • I already pay for FTB to collect taxes. Why should I have to pay twice? The burden of tax collection and enforcement should not be shifted to my businesses, as I cannot recover the costs. • If I make a mistake on withholding, I can be liable to the state and the independent contractors I use for penalties and amounts wrongly over or under withheld. In summary you want me to pay the state twice to collect the same amount of taxes. Once through the taxes I already pay and the second way by becoming a non-paid tax collector. Then you want me to make the state an interest free loan with no certainty when I will be paid back and finally you want me to take on additional payroll liability. This proposal is bad for my business, bad for the California economy and bad public policy.
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