California: Considering Net Receipts Tax (NRT)??
Last week, the California Commission on the 21st Century Economy discussed a proposal to impose a business net receipts tax (NRT) replacing existing business taxes, in part or in whole. The proposed NRT appears to be similar to gross receipts taxes imposed by other states such as Michigan's Business Tax and Texas' Margin Tax (Franchise Tax).
On March 27, 2009, Governor Schwarzenegger issued an Executive Order to establish the Commission and examine California's tax system, searching for ways to modernize its tax system and eliminate the "ups and downs" of its tax revenues.
The likelihood that the proposal would actually be considered and passed is unknown at the moment; however, with the state's budget crisis only getting worse, I wouldn't rule anything out.
In addition, the California Manufacturers and Technology Association (CMTA) is following this proposal and has a nice write-up on their site as well. Click on the following link to access their write-up: http://www.cmta.net/legupdate.php?legupdate_id=1535
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Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States. He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect." For more info, visit his website: www.leveragestateandlocaltax.com
You can reach Brian at email@example.com.
Because state and local taxes are deceptively simple and endlessly complicated.