Many furniture retailers in California were hit hard by business closings and other restrictions triggered by COVID-19 outbreaks. The last thing they need is a tax increase.
But that’s what a bill pending in the State Assembly would give them. AB 1253, introduced last year to create local grant programs, recently was overhauled by Assemblyman Miguel Santiago of Las Angeles. Now it imposes a retroactive surcharge on taxable personal income over $1 million.
Many small businesses pay personal income taxes as sole proprietorships.
Santiago replaced the original content of AB 1253 with language that raises tax rates retroactive to Jan. 1, 2020 – before the COVID-19 impact hit businesses and individuals in this country. It adds these surcharges:
- 1 percent on taxable income over $1 million but less than $2 million;
- 3 percent on taxable income over $2 million but less than $5 million; and
- 3.5 percent on taxable income over $5 million.
CalChamber calls bill raising taxes a ‘job-killer’
The bill would be expected to take in revenue of nearly $7 billion annually – much of that coming from the earnings of small businesses, including furniture stores.
CalChamber, which has labeled AB 1253 a “job-killer” bill, notes that California already imposes the highest income-tax rates in the country.
“Currently, the highest state tax rate for individuals and sole proprietors is 13.3 percent,” it wrote July 31. “If AB 1253 were enacted, the 13.3 percent rate would rise to 14.3 percent for incomes above $1 million and the state’s highest rate would be raised to 16.8 percent for incomes above $5 million.”
This measure likely will have a damaging effect on some Home Furnishings Association members and their efforts to keep employees on payroll. They should contact their Assembly representatives and urge them to oppose AB 1253. Assembly members can be found here.