California Revives COVID Business Tax Cut Proposal
Sacramento, CA — California businesses received a combined $97-billion in Paycheck Protection Program federal loans during the coronavirus pandemic.
Most of the loans will not have to be paid back, however, the state is required to collect taxes on the money. The state Senate voted 37-0 yesterday to make the loan money tax exempt.
This idea was introduced earlier in the year, but Governor Gavin Newsom raised concerns because the CARES Act specifically stated the money could not be used for a “tax cut,” so more information was requested from the feds. The Treasury Department has alerted the Newsom Administration that California will not be in jeopardy of losing CARES Act funding if it passes the legislation. After being approved in the Senate, it now moves to the Assembly for consideration.
It will cost the state an estimated $4.4-$6.8 billion over the next six years. Assembly Speaker Anthony Rendon calls it “one of the biggest proposed tax cuts in California history.” He says he will bring it up for a vote in the Assembly imminently.
Republican Senator Andreas Borgeas, who represents the Mother Lode, has been pushing for the tax exemption for PPP recipients. He says, “Businesses that have received assistance during the pandemic should not be penalized by the state.”