Heads up, law firms. Just in time for Halloween the bogeyman of expanding state sales taxes to services is back.
Gov. Arnold Schwarzenegger just signed an executive order creating a 12-member commission that will suggest methods for creating a “more stable” revenue stream than California’s current scheme, which is tied heavily to the yearly economic fortunes of the state’s wealthiest taxpayers.
“We are relying so heavily on income taxes,” Schwarzenegger said at a webcasted signing event in Los Angeles. “We are basically just looking for one thing, and that’s to create (revenue) stability.”
Neither Schwarzenegger nor Assembly Speaker Karen Bass, D-Los Angeles, specifically mentioned a tax on services. But it has been discussed before, including earlier this year.
Reform-minded pols say California’s tax system is a throw back to the early 20th century economy, when agriculture and manufacturing were kings and e-business wasn’t even a fantasy.
“There is a lot of revenue that the state of California isn’t capturing,” Bass said Thursday.
No one knows just how much a tax on legal services would generate — or how it would work, practically. But the treasurer last year estimated that extending the sales tax to “construction and professional services” could bring the state $10 billion annually. That, ironically, is one estimate of the state’s current budget deficit.
The new commission, which is supposed to meet for the first time next month, will include six appointments from the governor, three from Bass and three from the Senate president pro tem, who, for another month anyway, is Don Perata, D-Oakland. None of the three have publicly appointed anyone yet. We’ll let you know if any lawyers show up on the list.
— Cheryl Miller
When will these governments get what private buisness deals with every day - reduce expenses to match revenue? Geez, they keep doing this stuff and soon the ugly head of taxing the internet will come back up again. They need to prove beyond all doubt that they've taken every possible step to reduce waste before they can even think about increasing their "revenue".
Posted by: George ("no tax in this office!") Bailey | January 30, 2009 at 09:09 AM
I have heard that one cannot charge a consumer taxes on services (for what it's worth, I am in California), or at least some types of services. But for the life of me, I cannot locate any law (state or fed) that sets this forth. The services in question happen to be tailoring clothing. Any ideas appreciated.
Posted by: MaxCaviar | April 16, 2009 at 03:20 PM