How can I minimize my state, federal, and international tax burden?
While most Americans have been closely following the United States Presidential election, there are numerous state tax initiatives that you may have overlooked. These proposed tax changes could significantly impact your finances. Voters in several states, including California, will see proposed tax increases on so-called “vice” items, like marijuana, soda, and cigarettes. Other states will decide on whether to raise income taxes and even institute a carbon tax. These tax proposals are extremely important and all taxpayers should research the potential implications of these proposed tax measures.
California voters must decide whether to enact taxes on marijuana. Proposition 64 aims to tax legalized marijuana in the state at a rate of $9.25 per ounce of flowers or $2.75 per ounce of leaves. Those buying cannabis at licensed retailers will pay 15 percent at the point of sale along with state sales tax of 6.35 percent and local sales tax, which ranges from 1.25 percent to 3.75 percent.
Several other states will decide on measures that would both legalize and tax marijuana, including Maine, Arizona, and Massachusetts. Other states that allow recreational marijuana have decreased taxes to prevent the black market from flourishing. New revenues from the legalization and taxation of marijuana nationwide could surpass $2.7 billion.
California could also potentially see an increase in the state cigarette tax, going from $.87 cents to $2.87 per pack. If the measure passes, California will have the ninth-highest cigarette tax in the nation. Residents in several California cities will vote on other ballot measures that call for taxing sugar-sweetened beverages.
Income Tax in California
Another important California tax measure to consider is Proposition 55. If passed, Prop 55 will extend California’s individual income tax rate of 13.3 percent. California will continue to have the second highest income tax rate in the country if the measure passes.