STATE OF CALIFORNIA

CALIFORNIA SENIOR LEGISLATURE
120 Ninth Street, room 260, Sacramento, CA 95814
Phone (916) 322-5630 Fax (916) 327-1859
 Proposal Introduction Form
Filing Deadline June 1, 2000

 Name Roland A.Boucher Phone 949 551-6363

Sr. Senate MEMBER STATE PROPOSAL


SUBJECT LET SENIORS USE THE SHORT 540-EZ FORM
For Reference the 540-EZ TAX TABLE
RESUBMISSION of prior-year proposal (Senate version of AP35)

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Part 1: Summary

This proposed legislation would give seniors and others, the opportunity to compute the tax for their particular income level by using a simple, short, but concise form. All data needed to complete said form comes from a third party, banks, employers, etc. thereby eliminating the fear of an audit. The time spent completing the proposed Tax Form would be greatly reduced.


Part 2: Supporting Statements

WHEREAS: Senior citizens and others waste a tremendous amount of time and
effort to keep financial records required just to protect themselves in
case of future audit; and


WHEREAS: Seniors OVER 65 years of age and others with income from other
than WAGES and INTEREST are prohibited from using the simple
Franchise Tax Board 540 EZ Form

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Part 3: Proposed Solution


RESOLVED: That Seniors and others be allowed to use the CA 540-EZ
Tax Form by removing the current restrictions on age and allowing
income from interest, dividends, pensions, and capital gains

RESOLVED. The current income limit of $50,000 be raised to $100,000 for
Married couples, and the tax rate be limited to 2.5 percent to provide a
comparable tax level offered those claiming itemized deductions on
CA Forms 540 and 540A.




Part 4: Funding: This proposal will have Moderate impact on the state budget
If all Seniors chose to use the new form a revenue reduction of up
to 100 million could result. If adopted by all Californians who do not
Itemize, a reduction of up to 500 million dollars might be expected.


Part 5: Co-authors Glenn Muggelberg Senior Senator Psa 17


Part 6: Contact for Leg Council
Phone 949 552-9174 ....... Hours 9 am to 9 pm
Fax 949 552-4549 ....... all hours
e- mail rolandfly@earthlink.net


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Background information
Purpose of Proposal
To Let seniors use short tax form
Studies, Reports, Statistics and Facts
This Concept was first introduced at the National Silver Haired Congress in 1999.
A State Version (540-EZ) was carried by Senior Assemblywoman Dee Erman last year. . The 540 A and 540 tax booklet has 67 pages, 61 of instructions and 5 of tax tables The 540-2EZ Tax Booklet has 32 pages, 2 of instructions,15 of tax tables and 15 on teletax. It is self evident that 2 pages are better than 61
Additional Studies, Statistics, and Facts
Senior Population in CA 3.4 Million over 65......Census Bureau
540 EZ Short form users in CA 2 Million (16%) in 1996..........CA-FTB
Standard Deduction Filers in CA 7.5 Million (63%) in 1996..........CA-FTB
12 MILLION CALIFORNIA TAX RETURNS WERE FILED IN 1996 ., 76 PERCENT HAD AN ADJUSTED GROSS INCOME (AGI) OF LESS THAN 50,000 DOLLARS AND 93 PERCENT HAD AN AGI OF LESS THAN 100,000 DOLLARS.

Restrictions preventing Taxpayers from using the short form
1 You are Age 65 year of Age or older
2 You have more than $400 income from Interest
3 You have any income from Dividends
4 You have any income from Pensions
5 You have any income from Capital Gains
6 Your total income is more than $50,000 single or married

Restriction # 6 imposes a severe penalty on married couples who would otherwise be allowed to use the short form. State Controller Kathleen Connell removed this penalty when developing the new 540-2EZ form in 1999.

Removing restrictions 1 through 5 would allow 8 million California taxpayers to use the simple 540-EZ tax form.

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Expanding the coverage to 90 percent of taxpayers
30 percent of tax filers now itemize their deductions. These deductions increase with income and are more valuable to the wealthy and upper middle class . The Franchise Tax Board imposes a ever increasing tax brackets (6%, 8%, and 9.3%) on these taxpayers which counteracts the benefits of the itemized deductions allowed them. Many of These Taxpayers can be induced to use the 540-EZ Tax Form which allows no itemized deductions by limiting the tax rate allowed. The average tax rate collected by those earning less than $100,000 is less than 2%. It Is not unreasonable to limit the rate of tax paid by short form filers to 2,5% By this simple strategy it may be possible to expand the use of the 540-2EZ to 90 percent of California.s Taxpayers

References: 1 Franchise Tax Board Annual Report for 1997
2 Census bureau web site

Legislative History
This Proposal was Introduced in the California Legislature as AB 2347 in 2000 by Assemblywoman Patricia Bates. and as AB 1370 (Wiggins), SB 831 (Poochigian)
and AB 305 (Strickland) in the 2001 Legislative session.
Fiscal Impact
The fiscal impact will be a reduction of State revenue from 100 to 500 million dollars. There will be some reduction in the state cost of tax collection. Most Seniors will no longer require assistance in tax form preparation.
What State Agencies or Departments will be affected ?
The Franchise Tax Board will incur minor one time expenses. Ongoing tax Collection cost will be reduced
What interest groups are affected
 Seniors, and lower to middle income Taxpayers
Who is in support
The National Taxpayers Union
Citizens for a Sound Economy
United Californians for tax Reform
Orange County ( Psa 22) has submitted AIT in support