Bill to create new taxes on advertising and high earnings introduced this week
Legislation was introduced this week that would allow the sale of advertising to be taxed as well as corporate earnings that exceed $1 million.
Intended to capture revenue derived from providing services (lawyers, doctors, accountants, website designers, property developers, etc.) the language in the bill is so broad that it would include advertising, consulting and virtually every service provided to a newspaper by a contractor.
The bill exempts health care, education, and child care services as well as interest and insurance payments subject to the gross premiums tax. Also exempt would be a business with gross receipts of less than $100,000 in the previous four quarters.
The revenue gained from the service tax would be used to “provide tax relief to middle-income and low-income Californians negatively affected by recent changes to federal tax law as well as other changes to federal programs and assisting in securing greater stability for California’s infrastructure, its workforce, and its education systems, including higher education.”
The second bill, ACA 22 by Assembly members Kevin McCarty (D-Sacramento) and Phil Ting (D-San Francisco) would create the “Middle Class Fiscal Relief Fund” by imposing a 10% surcharge on the net income of a corporation that exceeds $1 million.
The funds raised by the surcharge would be dedicated to the following: 40% for the support of the public school system and public institutions of higher education; and 60% as determined by the Legislature to expand the Earned Income Tax Credit, a tax rebate, or providing other tax relief; expanding access to child care and early education; providing for affordable health care; and expanding higher education financial aid.
Both bills are eligible to first be heard in late March or early April by the respective policy committees in each house. Tax bills, however, have later deadlines than other types of bills so they are not likely to be heard until probably sometime in May.