To fund a statewide homelessness solutions program, California legislators have proposed changes to CA Section 23151, which would impose significant tax increases on California businesses and individuals. The purpose of the bill is to provide at least $2.4 billion annually to fund a comprehensive plan to address the current homelessness crisis in the state. If passed by the Legislature, the proposed amendments to AB 71 would take effect for taxable years beginning on or after January 1, 2022.
The proposed changes include the following tax increases:
- Increase the personal income tax on incomes of more than one million dollars ($1,000,000).
- Increase the tax rate on corporations with taxable income of more than five million dollars ($5,000,000) from 8.84% to 9.6% and on financial corporations from 10.84% to 11.6%, unless the minimum franchise tax is greater.
- Change the water’s-edge election to require taxpayers making the election to include 50% of global intangible low-taxed income (GILTI) and 40% of the repatriation income of affiliated corporations in their gross income but not in the apportionment factors of the affiliates. If the proposal is enacted, taxpayers will be able to make a new election in 2022.
- Increase personal income for GILTI amounts in modified conformity with the related federal provisions.
A coalition headed by California Taxpayers Association is lobbying to defeat the proposed amendments. Ryan will continue to monitor and report on these developments.
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Mark L. Nachbar
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