SB 37

Bill Subjects

Abstract

The Corporation Tax Law imposes taxes according to or measured by net income at a rate of 8.84%, or for financial institutions, at a rate of 10.84%, as specified. This bill would, for taxable years beginning on or after January 1, 2020, revise that rate for corporations with net income subject to taxes under that law of $10,000,000 or more to instead impose a tax rate from 10.84% to 14.84%, or for financial institutions, from 12.84% to 16.84%, based on the compensation ratio, as defined, of the corporation. The bill would increase those new applicable tax rates by a factor of 1.5 for those taxpayers that have a specified decrease in full-time employees employed in the United States as compared to an increase in contracted employees or foreign full-time employees, as described. The bill would deposit the revenues derived from this tax into the General Fund, as specified, and would require those revenues to be used to offset the fiscal impact of any child tax credit and, upon appropriation by the Legislature, to support the expansions or improvements to early childhood programs and other educational programs. The bill would make these tax rates inoperative for taxable years beginning on or after January 1 of any calendar year in which the federal corporation tax rate is 35% or more. This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIIIA of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature. This bill would take effect immediately as a tax levy.