Many California business owners are turning to corporate tax firms such as Allen Barron, Inc. to learn more about how the governor’s proposed tax hike might affect them and their businesses, but many more are still in the dark. As of now, the planned tax hike is still just a proposal, but it will likely reach the ballots in November. According to an article in the Los Angeles Times this March, a majority (64%) of voters in a recent survey from USC Dornsife/Los Angeles Times said they support the governor’s measure. For businesses and business owners in this state, it’s a good idea to learn more about this proposal and how it might affect them if it becomes law.
The Governor’s Proposal
California Governor Jerry Brown has developed a proposal to raise the state sales tax and increase surcharges on individuals with incomes above a certain level. The money is intended to help balance the woefully disorganized and chaotic state budget, and to provide funding for public school programs that have faced many detrimental budget cuts in recent years. The increase in the state sales tax would amount to one quarter of one cent on every dollar, and would last for the following four years. The levy on higher income earners would apply to individuals who earn more than $250,000 per year and would be a graduated surcharge lasting for the following seven years.
How This May Affect You and Your Business
The proposed sales tax increase in the governor’s plan would affect everyone, including business owners and customers alike, with an increase on the cost of goods and services. For many business owners, the tax levy increase would have no effect, while for other businesses it would certainly affect the owner and various high-earning executives. The business itself would not be levied, but individuals within the company would be expected to pay more to support the schools and balance the budget. This aspect was what garnered the most voter support, according to the Los Angeles Times. Most voters would oppose a large state sales tax, but were comfortable with higher income earners paying more.
There’s no telling what will happen with the ballots this November, but in any case it’s a good idea for business owners to contact a corporate tax firm to learn more about how these tax proposals may affect them.
For assistance with tax planning or a review of how these tax hikes could affect you and/or your business, please call us at 866-631-3470 to schedule a complimentary, initial consultation with one of our tax professionals.