SeeSALT BlogOn November 12, Jeffrey Vesely presents the California Update during the 2018 Annual Meeting of the Financial Institutions State Tax Coalition.
California Update
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Articles Posted in California
Western States Petroleum Association’s Property Tax Educational Forum
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On September 18, Breann Robowski presents during the Western States Petroleum Association’s Property Tax Educational Forum.
Local Sugar Taxes May Be Headed for a Crash
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(This article was originally published by Law360 on August 24, 2018.)
California is the latest to join a growing list of states to ban local taxes targeted at sweetened beverages or similar sugar taxes. California Assembly Bill 1838 signed into law on June 28, 2018, imposes a 13-year ban on any new local taxes on carbonated and noncarbonated beverages and other “groceries.”1 Arizona and Michigan have done the same and three more states, Oregon, Pennsylvania and Washington are considering similar bans. The public policy debates behind these recent legislative enactments are no different than the all too familiar “sin taxes” that harken of decades, if not centuries past.
Aside from the inherent differences between sugary groceries and the likes of tobacco, alcohol or gambling, sweetened beverage taxes imposed at local levels pose serious compliance issues for distributors and retailers. The recent popularity of these taxes at the local level not only has the beverage and retail industry fired up over the compliance issues, but citizens are beginning to recognize the paternalistic nature of these taxes and their regressive effects on the communities.
Fund Managers Face Tax Hike If California Passes AB 2731
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(This article was originally published by Law360.)
California’s A.B. 2731 seeks to accomplish what the federal Tax Cuts and Jobs Act did not, namely, to close the carried interest “loophole.” Currently making its way through state assembly committees, AB 2731 would impose an additional 17 percent tax on interest income derived from investment management services on taxpayers subject to California’s personal income tax law.
Current State Tax Developments in California and Other Western States
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On April 27, Robert Merten presents on the “Current State Tax Developments in California and Other Western States” during Tax Executives Institute’s Denver Chapter Meeting.
California’s Clean Energy Equipment Tax Exemption and the Value of Stakeholder Input
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In “California Seeks Input on Clean Energy Equipment Tax Exemption,” an article that originally appeared in Law360, Carley Roberts, Robert P. Merten III and Jessica N. Allen summarize the sales and use tax exemption’s scope and qualifying requirements, the 2017 legislative changes to it, the CDTFA’s proposed amendments and why stakeholders may want to participate in the IPM process.
Ballot Initiative Seeks to Eliminate Prop 13 for Commercial and Industrial Real Estate
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TAKEAWAYS
Initiative 17-0055 seeks to put two significant changes to California’s property tax system before voters in November—(1) the elimination of Proposition 13 protection for commercial and industrial properties in favor of reassessment at least every three years and (2) the addition of a tangible personal property tax exemption of $500,000 for all taxpayers and a full tangible personal property tax exemption for taxpayers with less than 50 California employees. Proponents of the Initiative claim these revisions are needed to raise funding to support California schools.
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Dueling Rent Taxes Come Up before San Francisco Voters in June
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TAKEAWAYS
- It is estimated that about $65 million annually would be collected from the commercial real estate industry under the Housing for All tax.
- It is estimated that about $150 million annually would be collected from the commercial real estate industry under the Universal Childcare for San Francisco Families tax.
- The election presents commercial landlords with the prospect of a massive tax increase from the current 0.3% rent tax, though the Housing for all Measure is clearly the less burdensome of the two.
There will be competing commercial rent tax measures on San Francisco’s June 2018 ballot. The “Housing for All” measure would impose a new 1.7% tax on commercial rents in San Francisco, effective January 1, 2019. The “Universal Childcare for San Francisco Families” measure would impose a new 3.5% tax on commercial rents (1% on rents from warehouses) in San Francisco (also operative January 1, 2019). Both measures specify that only one measure can be adopted, and that if both measures secure sufficient votes for passage, the measure with the most votes will prevail. If either of these measures were to be adopted it would be in addition to San Francisco’s existing 0.3% gross receipts tax on rentals.
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California Supreme Court Expands the California Real Estate Transfer Tax to Entity Transfers that Cause Property Tax Re-Assessments under Proposition 13
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State and local real estate transfer taxes have become larger planning concerns for investors in U.S. real property, particularly in gateway cities like New York, Los Angeles and San Francisco. This article by colleagues Craig A. Becker, Richard E. Nielsen, Breann E. Robowski and Andrew J. Weiner describes a recent expansion of the scope of California real estate transfer taxes.
Many Questions Unanswered After California’s Tax Shakeup
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(This article originally was published by Law360 on October 7, 2017.)
On Sept. 16, 2017, California Governor Jerry Brown signed Assembly Bill (A.B.) 131 into law,[1] which takes effect immediately and makes various changes to the Taxpayer Transparency and Fairness Act of 2017 enacted on June 27, 2017.[2] The Act overhauled the California State Board of Equalization (BOE) and created two new tax agencies.