California Still Considering Tax Reform: Net Receipts Tax?

The California Commission on the 21st Century Economy (http://www.cotce.ca.gov/) met on July 16, 2009 and discussed several "tax packages" or potential changes to the state's tax laws.

Click on the following to access the presentation from the July 16, 2009 meeting:

http://www.cotce.ca.gov/meetings/2009/7-16/testimony/documents/STAFF_PRESENTATION_7-16-09.pdf

The following is a high-level summary of the "tax packages" discussed:

Tax Structure Package 1:

1. Uniform personal income tax rate of 6%
2. Standard deduction of $15,000 single/$30,000 joint
3. Itemized deductions for mortgage interest, property tax, charitable contributions, phased out at higher income levels
4. Eliminate corporation tax
5. Eliminate state sales tax
6. Impose NET RECEIPTS TAX

Click on the following link to view a tentative summary of California's proposed Business Net Receipts Tax (BNRT):

http://www.cotce.ca.gov/documents/correspondence/documents/STAFF%20MEMO%20-%20TAX%20PACKAGES%20&%20BNRT%20-%207.14%20-%202%20OF%203.pdf

Tax Structure Package 2:

1. Personal income tax: two rates: 3.75% up to $25,000 single/$50,000 joint, 7% at higher income levels
2. Standard deduction of $15,000 single / $30,000 joint
3. Itemized deductions for mortgage interest, property tax, charitable contributions, phased out at higher income levels
4. Reduce corporation tax rate to 7%
5. Impose new Fuels tax

A package of recommendations is scheduled to be delivered to Governor Schwarzenegger and the Legislature by July 31, 2009.