Democrats in the state Senate had large-corporation tax structures in their sights this week when proposing a tax hike on big businesses.
The plan would increase state business taxes 2.15% on annual income above $1.5 million. Meanwhile, the plan would simultaneously lower taxes on that initial $1.5 million by 2.21%. The net result would be a higher rate for about 2,500 businesses, with an extra $7.2 billion in revenue for the state, and a lower tax rate for about 1.6 million businesses, at a revenue loss of about $2.2 billion, according to the Associated Press.
The approximately $5 billion in over all revenue gains would go toward lower-income earners claiming tax credits, as well as programs supporting education, child care and mitigating homelessness.
All California businesses currently pay a tax rate of 8.84% on income. The proposal would shift that to 6.63% on a business’s first $1.5 million in income and to 10.99% on income above that.
The proposal has yet to be considered in the state Assembly. A spokesperson for Gavin Newsom said the governor would not support the tax changes, saying the plan would “jeopardize the progress” the state has made fiscally in recent years. The state is facing an estimated $22.5 billion deficit, the Newsom administration said in January.
