Tax Increase Bill Reintroduced with Focus on Corporate Taxes

Legislators revised a proposal for a corporate tax increase to fund programs for the homeless.

Legislators revised the proposed AB 71, which would increase taxes to fund homelessness programs. The changes remove the personal income tax provisions that were in the December version of the bill (see article), and focus on corporate taxes.

The amended version of AB 71 would increase corporate taxes for tax years after January 1, 2022 to establish funding for programs for the homeless. The bill would:

• increase corporate tax rates from 8.84% to at least 9.6% on corporations with taxable income of $5 million or more;

• Increase tax rates for financial institutions from 10.84% to 11.6%, unless the $800 minimum franchise tax is greater;

• prohibit business credits from reducing the additional tax liability added by the bill by more than $5 million.

(The tax rate increases were first introduced in SB 37 in 2020 (see article)).