The upcoming vote on Measure C in Sacramento is stirring up conversations among local businesses. This measure aims to revamp the current business tax system, affecting tax rates and escalating the cap on maximum taxes owed.
Should Measure C pass, businesses will experience significant alterations in their tax obligations. Adjustments to existing tax rates and a hike on the maximum applicable tax are some of the proposed changes which could heavily impact businesses’ financial planning and revenue.
The initiative to amend the Business Operation Tax (BOT) rates set since 1991 is part of the measure. This includes tax rates readjustments anticipated to be assessed annually, taking into account present-day inflation. There’s also a move towards tax brackets revised according to gross receipts—smaller rates for smaller businesses, and higher ones for larger corporations.
Professionals within the Sacramento area, including doctors, lawyers, and accountants, currently paying an up-to $300 plus $30 per employee tax, will encounter a new tax regime of $684 and an additional tax of $68 per licensed employee. Real estate agents, insurance brokers, and stockbrokers, currently paying $100 and an additional $30 for each type of employee, will encounter the same new tax regime. Real estate agents will also be subjected to an extra $228 flat tax every three years, alongside $68 for each qualified individual.
Measure C also increases the financial obligations of landlords who own residential properties, and hotel/motel owners—resulting to an enhanced Business Operations Tax. Meanwhile, businesses taxed based on their gross receipts, except for cannabis-related businesses, will also be influenced by Measure C, specifically when the business’ earnings exceed the $100,000 threshold.
Furthermore, Measure C proposes a significant leap on the maximum tax cap—from $5,000 to $125,000 over a five-year period. This highlights the prospect of the measure greatly affecting only businesses that produce a considerable amount of income. These potential changes underscore the importance of businesses staying abreast with these proposed amendments to properly plan their operations for 2023, should Measure C be approved.
