Bill Text: CA SB1372 | 2013-2014 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: Corporation taxes: tax rates: publicly held corporations: credits.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2014-08-28 - Read third time. Refused passage. (Ayes 18. Noes 17. Page 4953.) [SB1372 Detail]

Download: California-2013-SB1372-Amended.html

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BILL NUMBER: SB 1372	AMENDED
	BILL TEXT

	AMENDED IN SENATE  APRIL 21, 2014
	AMENDED IN SENATE  APRIL 1, 2014

INTRODUCED BY   Senators DeSaulnier and Hancock

                        FEBRUARY 21, 2014

   An act to amend Section 23151 of the Revenue and Taxation Code,
relating to taxation, to take effect immediately, tax levy.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 1372, as amended, DeSaulnier. Corporation taxes: tax rates:
publicly held corporations.
   The Corporation Tax Law imposes taxes according to or measured by
net income at a rate of 8.84%, or for financial institutions, at a
rate of 10.84%, as specified.
   This bill would, for taxable years beginning on and after January
1, 2015, revise that rate for taxpayers that are publicly held
corporations, as defined, and instead impose an applicable tax rate
from 7% to 13%, or for financial institutions, from 9% to 15%, based
on the compensation ratio, as defined, of the corporation. This bill
would increase the applicable tax rate by 50% for those taxpayers
that have a specified decrease in full-time employees employed in the
United States as compared to an increase in contracted and foreign
full-time employees, as described.
   This bill would include a change in state statute that would
result in a taxpayer paying a higher tax within the meaning of
Section 3 of Article XIII A of the California Constitution, and thus
would require for passage the approval of 2/3 of the membership of
each house of the Legislature.
   This act provides for a tax levy within the meaning of Article IV
of the Constitution and shall go into immediate effect.
   Vote: 2/3. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 23151 of the Revenue and Taxation Code is
amended to read:
   23151.  (a) With the exception of banks and financial
corporations, every corporation doing business within the limits of
this state and not expressly exempted from taxation by the provisions
of the Constitution of this state or by this part, shall annually
pay to the state, for the privilege of exercising its corporate
franchises within this state, a tax according to or measured by its
net income, to be computed at the rate of 7.6 percent upon the basis
of its net income for the next preceding income year, or if greater,
the minimum tax specified in Section 23153.
   (b) For calendar or fiscal years ending after June 30, 1973, the
rate of tax shall be 9 percent instead of 7.6 percent as provided by
subdivision (a).
   (c) For calendar or fiscal years ending in 1980 to 1986,
inclusive, the rate of tax shall be 9.6 percent.
   (d) For calendar or fiscal years ending in 1987 to 1996,
inclusive, and for any income year beginning before January 1, 1997,
the tax rate shall be 9.3 percent.
   (e) For any income year beginning on or after January 1, 1997, the
tax rate shall be 8.84 percent. The change in rate provided in this
subdivision shall be made without proration otherwise required by
Section 24251.
   (f) (1) For the first taxable year beginning on or after January
1, 2000, the tax imposed under this section shall be the sum of both
of the following:
   (A) A tax according to or measured by net income, to be computed
at the rate of 8.84 percent upon the basis of the net income for the
next preceding income year, but not less than the minimum tax
specified in Section 23153.
   (B) A tax according to or measured by net income, to be computed
at the rate of 8.84 percent upon the basis of the net income for the
first taxable year beginning on or after January 1, 2000, but not
less than the minimum tax specified in Section 23153.
   (2) Except as provided in paragraph (1) and subdivision (g), for
taxable years beginning on or after January 1, 2000, the tax imposed
under this section shall be a tax according to or measured by net
income, to be computed at the rate of 8.84 percent upon the basis of
the net income for that taxable year, but not less than the minimum
tax specified in Section 23153.
   (g) (1) For taxable years beginning on or after January 1, 2015,
the tax imposed under this section upon a publicly held corporation,
as defined in Section 162(m)(2), relating to publicly held
corporation, of the Internal Revenue Code, shall be a tax according
to or measured by net income, to be computed at the applicable tax
rate upon the basis of the net income for that taxable year, as
determined by paragraph (2), but not less than the minimum tax
specified in Section 23153.
   (2) The applicable tax rate shall be determined as follows:

If the compensation      The applicable tax rate
ratio is:                is:
Over zero but not over   7% upon the basis of
25                       net income
Over 25 but not over 50  7.5% upon the basis of
                          net income
Over 50 but not over 100 8% upon the basis of
                          net income
Over 100 but not over    9% upon the basis of
150                      net income
Over 150 but not over    9.5% upon the basis of
200                      net income
Over 200 but not over    10% upon the basis of
250                      net income
Over 250 but not over    11% upon the basis of
300                      net income
Over 300 but not over    12% upon the basis of
400                      net income
Over 400                 13% upon the basis of
                          net income


   (3) For purposes of this subdivision: 
   (A) "Client employer" means an individual or entity that receives
workers to perform labor or services within the usual course of
business of the individual or entity from a labor contractor. 

   (A) 
    (B)  (i) "Compensation," in the case of employees of the
taxpayer other than the chief operating officer or the highest paid
employee, means wages as defined in Section 3121(a) of the Internal
Revenue Code, relating to wages, paid by the taxpayer during a
calendar year to employees of the taxpayer.
   (ii) "Compensation," in the case of the chief operating officer
and the highest paid employee of the taxpayer, means total
compensation as reported in the Summary Compensation Table reported
to the Securities and Exchange Commission pursuant to Item 402 of
Regulation S-K of the Securities and Exchange Commission. 
   (B) 
    (C)  (i) "Compensation ratio" for a taxable year means a
ratio where the numerator is the amount equal to the greater of the
compensation of the chief operating officer or the highest paid
employee of the taxpayer for the calendar year preceding the
beginning of the taxable year and the denominator is the amount equal
to the median compensation of all employees employed by the taxpayer
 , including all contracted employees under contract with the
taxpayer,  in the United States for the calendar year preceding
the beginning of the taxable year.
   (ii) For taxpayers that are required to be included in a combined
report under Section 25101 or authorized to be included in a combined
report under Section 25101.15, the calculation of the ratio in
clause (i) shall be made by treating all taxpayers that are required
to be or authorized to be included in a combined report as a single
taxpayer. 
   (D) "Contracted employee" means an employee who works for a labor
contractor.  
   (E) "Labor contractor" means an individual or entity that
contracts with a client employer to supply workers to perform labor
or services or otherwise provides workers to perform labor or
services within the usual course of business for the client employer.

   (4) A taxpayer subject to this subdivision shall furnish a
detailed compensation report to the Franchise Tax Board with its
timely filed original return.
   (5) (A) If the total number of full-time employees, determined on
an annual full-time equivalent basis, employed by the taxpayer in the
United States for a taxable year is reduced by more than 10 percent,
as compared to the total number of full-time employees, determined
on an annual full-time equivalent basis, employed by the taxpayer in
the United States for the preceding taxable year and the total number
of contracted employees or foreign full-time employees, determined
on an annual full-time equivalent basis, of the taxpayer for that
taxable year has increased, as compared with the total number of
contracted employees or foreign full-time employees, determined on an
annual full-time equivalent basis, of the taxpayer for the preceding
taxable year, then the applicable tax rate determined under
paragraph (2) shall be increased by 50 percent. For taxpayers who
first commence doing business in this state during the taxable year,
the number of full-time employees, contracted employees, and foreign
full-time employees for the immediately preceding prior taxable year
shall be zero.
   (B) For purposes of this paragraph:
   (i) "Annual full-time equivalent" means either of the following:
   (I) In the case of a full-time employee paid hourly qualified
wages, "annual full-time equivalent" means the total number of hours
worked for the qualified taxpayer by the employee, not to exceed
2,000 hours per employee, divided by 2,000.
   (II) In the case of a salaried full-time employee, "annual
full-time equivalent" means the total number of weeks worked for the
qualified taxpayer by the employee divided by 52. 
   (ii) "Contracted full-time employee" means an individual engaged
by the taxpayer to provide a specific set of services established
pursuant to the terms and conditions of a written employment contract
that delineates the length of employment, the salary and bonuses (if
any) to be paid, and the benefits that accrue to that individual.
 
   (iii) 
    (ii)  "Foreign full-time employee" means a full-time
employee of the taxpayer that is employed at a location other than
the United States. 
   (iv) 
    (iii)  "Full-time employee" means an employee of the
taxpayer that satisfies either of the following requirements:
   (I) Is paid compensation by the taxpayer for services of not less
than an average of  35   30  hours per
week.
   (II) Is a salaried employee of the taxpayer and is paid
compensation during the taxable year for full-time employment, within
the meaning of Section 515 of the Labor Code.
   (6) The Franchise Tax Board may prescribe rules, guidelines, or
procedures necessary or appropriate to carry out the purposes of this
subdivision, including any guidelines regarding the determination of
wages, average compensation, and compensation ratio. Chapter 3.5
(commencing with Section 11340) of Part 1 of Division 3 of Title 2 of
the Government Code shall not apply to any rule, guideline, or
procedure prescribed by the Franchise Tax Board pursuant to this
subdivision.
  SEC. 2.  This act provides for a tax levy within the meaning of
Article IV of the Constitution and shall go into immediate effect.