A New California Tax Proposal: Business Net Receipts Tax

California Commission issued a multi-hundred page tax report by the end of September, which they believe it will help the state's competency to challenge with other US states in means of taxation.

The commission stated that a new tax called 'Business Net Receipts Tax' (abbreviated as BNRT) will apply to all businesses in California state.

Currently, the corporate franchise / income tax in California is levied at the rate of 8.84 per cent, and the new Business Net Receipts Tax will eliminate this tax in 2012.

Business Net Receipts Tax will be staged in 5 years, beginning 2012. The tax rate will be 1.6% first year, then it will gradually increase to 4% in 5 years. 4% is the maximum rate.

Personal income tax in California will be a flat tax, and income tax brackets in California will reduce to 2 after the new tax.

The 5 percent part of the sales and use tax paid by the state will also be eliminated by the new Business Net Receipts Tax, again, in a 5-year transition period.