In a move that has surprised many, California Governor Gavin Newsom recently proposed a plan to close a major tax loophole that has been a source of contention in the state for years. The loophole, known as the “single sales factor” loophole, has allowed many large companies to significantly reduce their tax liability by basing their taxable income on sales within the state instead of the company’s total profits.
The loophole has been a source of frustration for many, who argue that the loophole has allowed large companies to avoid paying their fair share of taxes. Governor Newsom’s proposal would eliminate the loophole and require companies to pay taxes on their total profits instead of just their in-state sales.
The proposal has been met with both praise and criticism. Supporters of the proposal argue that closing the loophole would help level the playing field for small businesses who are unable to take advantage of the loophole. They also argue that it would generate much needed revenue for the state, which could be used to fund education and other public services.
Critics of the proposal, however, argue that closing the loophole would be a major blow to the state’s business climate. They argue that the increased taxes would make it more difficult for businesses to operate in the state and could lead to job losses.
It remains to be seen whether Governor Newsom’s proposal will pass, but it is certainly an intriguing one. It is a bold move that could have far-reaching implications for the state’s economy and its businesses. Regardless of the outcome, it is clear that Governor Newsom is serious about closing the loophole and ensuring that businesses are paying their fair share of taxes.