Legislative Update

A group of lawmakers this week proposed a union-backed personal income tax increase on California’s highest earners, with a top rate as high as 16.8 percent. California’s current top PIT rate of 13.3 percent already is the highest in the United States. The proposal introduced by Assembly Member Miguel Santiago is AB 1253 – the same bill number as an identical proposal he introduced last year that was held in the Senate Governance and Finance Committee without a vote. Santiago…

State lawmakers proposed two major tax increases this week: a wealth tax targeting Californians with a net worth above $50 million and a personal income tax increase on annual income over $2 million. The PIT increase was revealed this morning in amendments to AB 65, by Democratic Assembly Member Evan Low. The bill would create the California Universal Basic Income Program, funded via a 1 percent surcharge on income above $2 million beginning January 1, 2022. The bill would bring…

Governor Gavin Newsom this month signed two CalTax-supported bills that provide selective conformity to the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act. On September 9, Newsom signed AB 1577 (Burke), which conforms to provisions in the CARES Act relating to the Paycheck Protection Program (PPP). Conformity ensures that taxpayers who utilized a PPP loan under terms set by Congress will not be punished with an unexpected state income tax bill. In a letter to the governor, CalTax noted: “By conforming to the provisions that exclude these forgiven and covered…

Assembly Member Rob Bonta hosted a teleconference August 13 to unveil legislation to “establish a first-in-the-nation net worth tax” that would cost California taxpayers an estimated $7.5 billion per year, but announced during the event that the bill (AB 2088) will not advance. “The reality is this bill is not going to have a hearing and is not going to move through the process,” Bonta said, raising the question of why he and several coauthors triggered the state costs associated…

California Attorney General Xavier Becerra and Assembly Member Mark Stone announced February 20 that they are reintroducing legislation (AB 2570, Stone) to expand the False Claims Act to claims, records, and statements made under the Revenue and Taxation Code. The legislation closely mirrors the last amended version of last session’s version (AB 1270, Stone), which was approved by the Assembly but failed to clear the Senate Appropriations Committee. Among other things, it would allow private lawyers to bring nuisance suits…

Assembly Member Kansen Chu this week introduced AB 2843, which would require local governments to impose an additional annual business license tax based on the number of employees – businesses with more workers would be penalized with higher taxes. This is the first proposal for a statewide “headcount tax,” expanding upon an idea that has been gaining traction at the local level. Although Chu, a Democrat who represents a district in Milpitas, describes the charge as a “fee,” the legislative…