California Tax Series

* Re “California Taxes,” by Bill Stall and Ralph Frammolino, Oct. 10-15:

The Times is to be commended on its California tax series, which presented a tremendous amount of important and complex information in a simplified and informative manner. Unfortunately, two very important areas of the California tax environment not covered by the series are tax evasion and the underground economy. These represent more losses of revenue to state and local governments than any possible tax loopholes or exemptions. The theft of needed tax dollars has forced a higher tax burden on every citizen and business in California.

Tax evasion and the underground economy have been growing rapidly in California. Some of the reasons are the influx of business attitudes that believe fraud and tax evasion are a way of doing business; a lack of an efficient and aggressive educational system by California taxing agencies; a lack of policing powers within the current prosecution programs; a lack of sufficient criminal and civil penalties to curb tax fraud; and a lack of comprehensive tax legislation to restrict criminal activities.

One prime example of a simple change in the law that could stop the theft of hundreds of millions of dollars per year, at 17 cents a gallon, is the fuel vendor tax. Under current legislation, fuel vendor taxes are imposed at the distributors’ level. This provides thieves the opportunity to collect the taxes and never remit them to the state. However, with legislation that would impose the tax at the manufacturing level, the loss of tax revenue would be drastically reduced. This requires state legislative action and the redirection of energies on the part of taxing agencies, both of which have yet to materialize.

JEROME EDGAR HORTON

Supervisor, Audit Department

State Board of Equalization

Torrance

* I had two thriving businesses; (I) sold one and liquidated the other, both in 1988. State regulations, excess taxes and the high cost of tax accountancy made me call it quits and lay off nine employees.

I still have a very small corporation, to keep me busy, and try not to make any money in it. My fiscal year, ending June 30, accidentally showed a profit of $5,000. State tax alone was $6,700, because you cannot deduct long-term losses against long-term gains. Nevada here I come.

ARTHUR H. TUBER

Woodland Hills

* I applaud Stall and Frammolino on their series. The heavy-handed and adversarial intractability of the Franchise Tax Board is beyond belief. They answer to no one, and I mean that literally. For over five years I have been protesting an audit and escalation of my 1987 filing, and all I have to show for it is a file full of anonymous post cards telling me “not to worry, we’re taking care of the situation.” Their strategy is to not take any action from April to April so that they can attach each successive miserly refund; this has happened for three years running, including a garnishment of my wages to pay the 1987 penalty and interest they have never bothered to explain. In short, when you talk about stonewalling the taxpayers’ right to protest, and projecting the image of the “junkyard dog,” they earn every disparaging word.

JACK H. ARNOLD

Van Nuys

* Your series on taxes cites my office’s choice of taxes collected as a portion of total personal income as the most meaningful way of comparing tax rates among jurisdictions. Certainly we agree this is a better method than taxes per capita, which fails to account for California’s higher living costs.

However, the total personal income method can also be misleading, because of California’s huge population whose income is derived from government transfer payments or services. In fact, only 48% of California’s population works, one of the lowest figures in the nation and one which is going down, not up. The per taxpayer burden in California may be second only to Alaska, which is why so many of us walk around feeling highly taxed.

We are not at the top of any of the various state taxes that are levied--sales, property, income, use, corporations, and so on. But unlike most other states, we have all of them, and usually at a significant rate. The aggregate effect is a pretty darned high tax burden, which is why the governor is trying to hold the line.

RICH SYBERT, Director

Governor’s Office of Planning

and Research, Sacramento

* Your Prop. 13 story (Oct. 14) can be summed up in one paragraph:

“The situation now is worse because nearly $4 billion in property tax revenue was shifted away from local government in the 1992 and 1993 state budget agreements, (Janet M.) Ruggiero said.”

It’s time to really romp on the state legislators to cut spending instead of homeowners paying more.

LOU BROWN

Dana Point