The taxation landscape of the US state of California could face unprecedented changes in the near future, seeing the removal of traditional forms of sales and corporate taxation.
Arnold Schwarzenegger, Governor of California, has called for a special Legislature sessions to approve the transformation of California’s taxation system. The changes which he seeks to be approved are detailed in a report published on the 29th of September by the Commission on the 21st Century Economy, a fourteen member group appointed by California’s Democratic leaders to report on improvements to the tax system.
If approved, California’s tax system will see the removal of its traditional sales tax of 5% and corporate taxes of 8.84%. Personal taxation will lose its six tax rates and be replaced with two. Individuals earning under $28,000 and couples earning less than US$56,000 will see a 2.75% tax burden, while those will more will face 6.5%, eventuating to an overall drop for high-income earners.
The abolished sales and corporate tax income will be supplemented by a tax on net business receipts. The system will see a levy on charged all businesses with over US$500,000 gross annual receipts, regardless of industry. An exact figure has not yet been decided on for the tax, but will not exceed 4%.
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