SACRAMENTO BUSINESS JOURNAL: Lawmaker proposes tax on professional services

By Allen Young

January 21, 2015

A state senator has proposed a new tax on professional services including legal, financial, construction and other industries.

The legislation will get a conversation started in the Capitol about creating a more progressive tax structure. While the ultimate result is unknown, political observers expect the proposal to be taken seriously because its author, Sen. Bob Hertzberg, served as Assembly Speaker more than a decade ago and still holds political sway. Statewide business groups weren't immediately available for comment.

Gov. Jerry Brown, who campaigned on a promise of no new taxes without voter approval, commended Hertzberg for his "great ideas" at a Friday news conference event, but acknowledged "taxing new people is always difficult."

Senate Bill 8 is considered a work in progress, said a spokesman from Hertzberg's office, but here are the highlights:

▪Change the corporate tax structure in a way that has not yet been specified. Create new incentives for business investment and a higher minimum wage (another Democratic senator already has proposed raising California's minimum wage to $13 an hour).
▪An across-the-board reduction to the personal income tax. Specifically, the plan would seek to have families earning $100,000 each year only pay a 1 percent income tax. Top earners could also see a drop.
▪Direct the new tax dollars -- a projected $10 billion each year -- to public schools and universities, local governments and a new $2 billion earned income tax credit for low-income workers.

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