California is attempting to find a way to stabilize tax revenues so the budget becomes more stable (and manageable). Here is what the blue-ribbon panel came up with:
— Flatten the state’s income tax by reducing the number of brackets from six to two and capping the top rate at 6.5 percent. Millionaires would still pay an additional 1 percent on income above $1 million for mental health programs.
— Install a new form of tax on all businesses that applies to their net revenues minus purchases from other firms, dubbed the Business Net Receipts Tax. Companies would not be able to exempt wages and benefits for in-house employees, although they could exempt any payments to contractors. The rate would top out at around 4 percent, less than half of the existing corporate tax.
— Eliminate the 5 percent state sales tax portion that goes toward the general fund.
— Eliminate the state corporate tax.
— Establish a new independent tax forum to resolve tax disputes.
— Ask voters to establish a new rainy-day fund and spending cap.