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Don't Link Taxes

April 07, 1985

S. J. Diamond ("For What It's Worth", March 25) makes a case for tying state income taxes to federal income taxes. Aside from the fact that this would mean the Legislature would surrender to Congress its responsibility for levying taxes, Diamond fails to recognize some very important differences between federal and state taxes.

Sometimes, state legislatures are more reasonable, fair, and logical than Congress in designing tax laws. In California, for example, there is no "marriage penalty" in the state income tax. A woman and man living together and both working will pay the same California income taxes whether or not they are married to each other. There is no need for a Schedule W or a working-spouse adjustment. However, even using Schedule W does not eliminate the fact that this couple will pay more federal income taxes if they are married than if they live together without marriage. Do we really want our state taxes to reflect federal taxes in this case?

More important is the differing scopes of state and federal taxes. Using the federal Form 1040, we pay taxes on all income earned within the United States; the federal income tax is unaffected if we live and work part of the year in one state and part of the year in another state. But each state should tax only the income that is earned within that state.

Why should California collect taxes on income earned while a person lived and worked in New York, especially when New York will also tax that income? However, the proposals either to make the state income tax merely a percentage of the federal income tax or else to use the taxable income reported on the federal Form 1040 as the taxable income on California's Form 540 would collect taxes on out-of-state income.

DAVID E. ROSS

Agoura

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