Income Taxes

The governors of Connecticut and Tennessee--two of 10 states with no income taxes--have proposed adding them. In separate announcements Wednesday, Gov. Lowell P. Weicker Jr. of Connecticut and Gov. Ned McWherter of Tennessee also proposed cutting other taxes, including their states' sales taxes. Weicker said an income tax is needed to help erase a $2.4-billion budget shortfall. Tennessee Finance Commissioner David Mannig said his state won't be able to grant raises to teachers without one.

R&B singer Ronald Isley was convicted by a federal jury Monday of evading payment of more than $3 million in income taxes between 1997 and 2002. The Isley Brothers' frontman, who has a history of run-ins with the Internal Revenue Service, was accused of concealing income by demanding cash when his group performed on tour. Isley would then pay his musicians with currency, making it difficult to determine how much he had retained for himself, prosecutors said.

A PSA pilot who earned $273,953.33 from 1981 through 1983 was arrested Tuesday on charges that he evaded more than $25,000 in state income taxes for those three years. State officials said the man claimed that because U.S. currency is "counterfeit" he had no legal money with which to pay his taxes. The case of Flight Capt. Peter W. Sieber Jr., 50, was described by California Franchise Tax Board officials as the largest individual wage-earner evasion case in state history.

High-profile criminal defense lawyer Anthony Brooklier has admitted that he willfully failed to pay federal income taxes for 10 years. The delinquency is much longer than was indicated when the Beverly Hills attorney's tax problems surfaced last month. Rather than stand trial, he agreed at that time to plead guilty to two misdemeanors stemming from his failure to pay taxes for 1993 and 1994. Federal prosecutors on Monday released a copy of the plea agreement.

Gov. George Deukmejian and his wife, Gloria, released copies of their 1984 tax returns Tuesday showing they paid $15,863 in federal and state income taxes on an income of $62,713. A press release accompanying the returns declared that the Deukmejians "supported their family of five" on his salary as governor--$49,974--plus assorted outside income that included interest, dividends and $2,500 for a speech to the Armenian General Benevolent Union.

The Internal Revenue Service is experimenting with Spanish-language income tax forms in heavily Mexican American San Diego and Cuban American Miami in an effort to make it easier for people to pay their income taxes. There is resistance to the program, however. Some complain around these lines: "We shouldn't do anything to encourage people not to learn English"; "We shouldn't spend $100,000 on Spanish-language materials"; "English should be the only language of America."

President Bush and his wife paid more than $62,000 in income taxes in 1988 on income of $287,000, according to their tax return, which was made public by the White House on Wednesday. The return provides a glimpse of the first family's wealth, showing income from investments and charitable contributions and disclosing that the Bushes overpaid their taxes by about 50%, or $32,000. Asked about the whopping overpayment, White House Press Secretary Marlin Fitzwater said that Bush followed a "conservative" approach in making estimated payments, and added: "Maybe he had high ambitions for his blind trust."

The old plastics factory was fading into a blue-collar phantom, the work force down to 48, the future bleak. Then came a promising new technology--and an ambitious new governor searching for ways to make employers feel welcome in a state recently hammered by recession and job flight. Last year, the AlliedSignal Inc. plant sprang back to life. "Here's the government calling me and asking if they could help. It took me off guard," said Gary D.

SACRAMENTO - California Democrats would normally be thrilled by any bid to raise billions of dollars for schools. But not this year. The party establishment is lined up against Proposition 38, a plan bankrolled by millionaire lawyer Molly Munger that would increase education spending by hiking Californians' income taxes. The Democrats and their labor allies, who have formed a campaign committee dedicated to defeating Munger's measure, say the initiative could damage the same schools she wants to rescue.

Dear Liz: I'm 25 and trying to maximize my tax savings and retirement contributions. I currently have two jobs: One is the typical salaried position with taxes withheld where I earn $45,000 a year, while the other is self-employed work I do on the side that grosses about $7,000 a year. Currently I have a Roth IRA that I max out and a 401(k) that gets the equivalent of 13% of my salary when combined with my employer's contribution. Given that I don't get a refund on April 15 and end up having to pony up a lot of money, is there a way for me to set aside my self-employment income into a retirement account such that I can just bypass all taxes on it, including payroll taxes?