Tran Harry – The Economy Needs A Fix

Millions may not get tax refunds on time

In an already cash strapped state of the economy, California is possibly proposing to delay paying many of its citizens their tax refunds this year. Instead issuing an IOU for the amount owed and to be redeemed at a later date. It is said that California has a deficit of $41.6 billion this year and will be insolvent by February if they do not figure out a way to reverse their heavy deficit.

California has already begun to see the effects of the recessionary economy. Being at the center of the subprime mortgage meltdown cities such as Stockton, Tracy, and others are seeing some of the highest payment defaults in the country. To top that off, California is starting to see more out-migration, people who are leaving the state for other states compared to people who are coming in from other states. Californians are kissing the Golden State goodbye

Many of the reasons why people are leaving the state are the same reasons why the state is facing a budget deficit. High rates of unemployment and lower collections on sales and income taxes.

My question is what else will it take for other Californians to start leaving the state for greener pastures?

California is one of the few states with the highest cost of living expense in the country. For it’s moderate climate and coastal views many people are paying millions of dollars for their property. California has a state tax on top of a federal tax. The state is over populated with a population of 38 million. But I wonder if all these issues may be trumped by the final draw, will people respond so kindly if they don’t receive their tax refunds on time this year? Tax refunds use to be seen as extra money for spending on niceties in the past, maybe a new refrigerator or a vacation, but more and more are turning to their tax refunds to pay off bills and keep up to date with their loans. Will the state be able to convince people that an IOU is as good as money when so many need their money right away?

Some people have already made comments that they feel this is unfair to them, they say that if they were to miss the deadline to pay the state their taxes they would be hit with interest fees and late penalty fees but would the government flip that around and give people interest while holding onto their much needed money?

As a native Californian, I want to see the best for my state and I do hope that they will pull themselves through, but it looks like they are going into overtime without their star quarterback. I will definitely be keeping an eye out for more regarding the state of California.