For the first time in decades, California may actually have a balanced state budget.
In announcing his proposed plan for 2013–14, Governor Edmund G. Brown Jr. disclosed that his budget would be adequately financed with existing general tax revenues and conclude the fiscal year with a billion-dollar reserve. Independent Legislative Analyst Mac Taylor agrees that the state’s “nderlying expenditures and revenues are roughly in balance.”
After years of facing $20 billion annual deficits, and a forecast of a $1.9 billion deficit as recently as a month November 2012 by the Legislative Analyst, the news of a balanced budget without new taxes is indeed welcome.
Each legislative session employers are faced with the threat of legislation that seeks to increase taxes on their businesses. These bills are introduced despite the undisputed fact that California businesses are already strapped with some of the highest tax rates in the nation. Specifically, California’s top personal income tax rate is the highest in the nation, the state sales tax rate is the highest in the country, and the 8.84% corporate tax rate is the ninth highest in the country and the highest amongst western states. Taxation
- Monitor legislation and regulatory activity to ensure that California tax laws are fair and can be administered easily.
- Review state spending plans to make certain that economy and efficiency are the primary goals of government.
Stopping Hidden Taxes. Sponsored the 2010 winning campaign for Proposition 26, clearly defining fees and taxes at the state and local levels so that governments can’t pass real taxes with a simple majority vote.
Stopping Multiple Tax Proposals
- Blocked barriers to economic recovery in 2012, such as a proposal creating inappropriate wage liens (AB 2517); and a plan to repeal the net operating loss (NOL) carry back deduction (AB 2408).
- Blocking new barriers to economic development in 2011, such as a proposal requiring tax credits to sunset (SB 508); a “split roll” property tax (AB 448); and a multitude of hidden and specific tax hike proposals (AB 832, AB 1130, AB 1239, SB 237, SB 535, SB 653, SBX1 23); and 2010 proposals such as tax hikes on companies that invest in property and jobs (AB 1935, SBX6 18), targeted tax increases (AB 2100, SB 1210, ACA 22), and proposals creating uncertainty about the future availability of investment-encouraging tax credits (AB 2171, AB 2641, ACA 6, SB 1272, SB 1391, SBX6 20).
- Aggressive campaigning and advocacy by CalChamber-led coalitions in 2009 dampened enthusiasm for tax increases and new taxes, including targeted tax increases that would have exacerbated state budget problems and hurt the targeted industries; a “split roll” proposal to tax business properties at a higher rate; an energy tax that raises the price of gasoline and California-produced crude oil; and an onerous new requirement for business and government to withhold taxes on payments to independent contractors.
- Block legislation levying a climate change tax increase in 2009 (AB 231, AB 1405, SB 31)
Improving Tax Process
- Supported proposal in 2010, reducing complexity and waste in tax reporting and administration by conforming many California tax provisions to recent changes in federal tax law, including a conformity provision giving financial relief to troubled borrowers by excluding debt forgiven by a lender from a borrower’s taxable income (SB 401).
- Backed urgency legislation in 2009 improving taxpayer confidentiality (AB 192), reducing administrative delays in the reassessment process (SB 816) and simplifying sales tax compliance for non-profits (AB 1486).
- Stalled proposals in 2009 harming California online marketplaces, web-service providers, and websites of small businesses and non-profits by changing California’s sales tax law in a way that will encourage out-of-state retailers to instead do business with out-of-state counterparts (AB 178, ABX3 27).
he CalChamber has opposed and will continue to oppose tax increases that are targeted at one industry, seek to discriminate against businesses, or are punitive in nature. We are willing to engage in a discussion regarding tax increases when it is necessary and fair. For example, the CalChamber had no position on Proposition 30, which passed on the November 2012 ballot, and actually supported the temporary tax increases that were proposed as part of the budget negotiations in 2009.
Board of Equalization Sets 2013 Agenda
In 2013, the BOE plans to continue making changes to improve the taxpayer experience. The BOE will revise tax forms and make those forms available online in order to ease the burden on taxpayers. Taxpayers also can set up accounts with the BOE, file necessary forms, and check the status of any proceedings online. On November 1, 2012, BOE Chairman Jerome Horton conducted a conference to educate businesses about new tax laws and available tax credits to help businesses avoid confusion in 2013. Board of Equalization Sets 2013 Agenda
Expanding Sales Tax Base to Services
Position: Tax proposals that address only one portion of the tax scheme or target certain industries increase the risk of unintended consequences that will further harm the state’s economy and create more financial problems than those that already exist. The California Chamber of Commerce is willing to engage in tax reform discussions, but will continue to oppose any taxes that are discriminatory, unfair or punitive. Expanding Sales Tax Base to Services
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