SACRAMENTO - Starting this week, Californian's are seeing their pay checks shrink. The state is now holding back 10% more than it already does in state income tax.
"The timing of this isn't good," says San Diego State University Professor Dr. George Belch.
Most families would have to pay an additional $12 to $40 a month.
"It's not a huge sum of money, but in a situation where we are struggling to really get the economy going, where consumers are really tightening up the purse strings, it simply doesn't help," says Dr. Belch.
Even though the increase is about the same price as eating out, when you combine it with the 1% increase in the state sales tax, and a quarter percent increase in state income tax, and a cut in the dependent deduction, it adds up. Economists fear that means Californian's will spend less this holiday season and generate even less sales tax. The result could be even less money in the state coiffeurs to cut the budget deficit and repay the loans.
"This is a bad idea...all they want is short-term solutions. They are not dealing with long-term solutions," says Richard Rider of San Diego Tax Fighters.
Rider cautions parents not to count on getting as much of the money back as they might think, since state lawmakers also dramatically reduced the dependent credit.
