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News & Press: Sacramento Report

Tax on Services

Tuesday, March 19, 2019  
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Although legislative efforts to tax services have failed to gain traction in the past, Senate Bill 522 (Hertzberg) seeks to revisit the issue. At this point the bill is basically a statement on California’s tax system without a specific plan to change the system. Senate Bill 522 does state the intent to enact a service tax to offset some of the benefits to businesses under the new federal income tax law. As the preamble of the bill points out, in 1950 personal income taxes accounted for 12% of California’s General Fund while today that figure is almost 70%. The result of the shift is to make California heavily reliant on income taxes, particularly from top earners. The stated goal of the bill is to reduce state budget volatility, maintain California’s progressivity in the tax code and ensure that out-of-state corporations that do business in California contribute their fair share to California’s economy.

California Land Title Association

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