California ~ Multiple Taxes: Governor Calls for Tax Extensions, Revamping of Enterprise Zone Credits, More

In his May revise to his proposed budget, California Gov. Jerry Brown has called on the Legislature to enact the following tax-related provisions that would:

— extend the current sales and use tax and vehicle license fee increases and the decrease in the personal income tax dependent credit exemption for an additional five years, subject to voter ratification;

— reinstate the 0.25% personal income tax surcharge for the 2012 through 2015 tax years, subject to voter ratification;

— adopt a mandatory, rather than an elective, single sales factor apportionment formula for corporation franchise and income tax purposes;

— create a 1% exemption (5% for start-up firms) from the state sales and use tax for manufacturing firms for equipment purchases beginning in 2012-2013 (the exemption would be contingent upon the passage of the mandatory single sales factor apportionment formula and the continuation of the 6% state sales and use tax rate, and would only be in effect for four years);

— modify the new jobs credit against personal income and corporation franchise and income tax to increase the credit amount from $3,000 to $4,000 per qualified employee, expand eligibility to employers with fewer than 50 employees rather than the current ceiling of 20 or fewer employees, and sunset the credit at the end of 2012; and

— revise the enterprise zone hiring credit against personal income and corporation franchise and income taxes to limit eligibility to employers that fill new jobs rather than existing jobs, limit the credit carryover to five years, require that the credit be claimed on an original return, and tighten other eligibility requirements.

Subscribers can view the text of the governor’s May budget revise summary.

2011-12 Governor’s Budget May Revision, California Gov. Jerry Brown’s Office, May 16, 2011

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