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California Tax Update

by DMA Staff | Feb 05, 2016
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Halfway to Signature Goal

Supporters of an initiative that will fundamentally change one of the major components of Proposition 13 have reportedly gathered half of the signatures they need to qualify the measure for the November ballot. They have until March 21 to finish gathering signatures, however, most experts believe that the measure, titled "Lifting Children and Families Out of Poverty Act" will gather the signatures and make it on to the November ballot.

The initiative will increase the property tax rate on taxable real property that has an assessed value of $3 million or more. The tax rate increases from an additional .3 percent to .8 percent for properties with assessments greater than $10 million.

Senate Committee Heard Change-in-Ownership Legislation

On January 19, the Senate Appropriates Committee heard legislation regarding change-in-ownership for legal entities that own California real property. The legislation (SB 259, Bates) would create a new change-in-ownership event when legal entities that are in possession of California real property have a 90% or more change in ownership in one event. The bill also increases the penalty for failure to report a legal entity transfer to the State Board of Equalization from 10% to 15%. The committee promptly placed the legislation in its suspense file where it is expected to remain.

California Has the Fourth Highest State-Local Tax Burden

California’s state and local tax burden is the fourth highest in the nation at 11 percent of the state income. This report came out of the Washington, D.C. based Tax Foundation on January 20. This ranking is based on data from 2012 and includes the voter approved Proposition 30 tax increase from the November 2012 ballot.

The California Supreme Court Denies Review of Lucent Decision

On January 20, the California Supreme Court denied the State Board of Equalization’s (BOE) petition to review the case of Lucent Technologies, Ins. and AT&T Corp. v. The State Board of Equalization. This case is a win for taxpayers because reiterates the state’s sales tax exclusion on technology transfer agreements (TTA).

The BOE Chairman has called for a Closed Session briefing at the February 23-25, 2016, Board Meeting to allow the Board to consider next steps and how best to expedite the administration of this decision and take appropriate action to implement the Court of Appeal's decision.

California Introduces Bill for Expanded Sales and Use Tax for Alternative Energy

Assembly member Susan Eggman has introduced a bill that will increase the sales and use tax exclusions for advanced manufacturers and manufacturers of alternative source and advanced transportation products, components or systems from $100 million to $200 million in a calendar year. The bill also states that if the $200 million cap is not met, the unused portion will roll over to the next calendar year to be used in addition to that year’s maximum.

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