Today, the Senate Governance and Finance Committee considered SB 567 (Lara: D-Bell Gardens), proposing multiple tax hikes on California businesses, who already have one of the highest tax burdens in the country, subsequently making California even less competitive.
The California Chamber of Commerce is opposing this bill. Here is a snippet how this bill will affect both family-owned businesses and corporations:
Family-Owned Businesses Hurt
Specifically, SB 567 targets family-owned businesses that transfer the business upon death to other family members. Under SB 567, the family members who inherit the business/property, would be forced to pay capital gains on the property that has appreciated in value, if the family member(s) have an adjusted gross income of $1 million or more.
SB 567 also seeks to eliminate the current deduction allowed for compensation paid to executive officers for achieving performance-based goals. This proposal would harm all corporations, but more specifically, those companies incorporated in California.
Finally, California already has the highest personal income tax and sales tax rates in the country, and one of the highest corporate tax rates as well. Californians just approved various tax increases and extensions on the November 2016 ballot. Additionally, state appropriations may exceed the Proposition 4 (Gann) limit, which over the next two years may trigger significant tax reductions.
I encourage you to read the full article, SB 567 Multi Tax Hikes on California Employers. As the Senate committee met today, there will be more to report on this bill, soon.
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Rorie Johnston is CEO of the Escondido Chamber of Commerce.