(FOX40) — Sacramento residents will soon vote on a bill that would change the way the city taxes businesses.
Measure C enacts two types of changes: the tax rates for different types of businesses in the city and the maximum amount businesses can owe.
rate change
The city points out that the business tax (BOT) tax rate has remained unchanged since 1991. Most tax rate changes track inflation and adjust the tax so that it is approximately proportional to the tax rate if the tax rate is adjusted annually. Future basics.
Licensed Expert
Currently, there are “accountants, architects, lawyers, audiologists, bacteriologists, certified public accountants, engineers, dentists, morticians, optometrists, osteopaths, internists, podiatrists, psychologists, surgeons, veterinarians'' in the city. This applies to those who are running a business as a doctor. You may have to pay up to $300 depending on the number of years you have your license.
They must also pay $30 for each licensed person they employ.
Real estate brokers, insurance brokers, and stock brokers must pay $100 plus $30 for certain types of employees and contractors they hire.
Under Measure C, first-licensed professionals would pay $684, regardless of the number of years they were licensed. It will also pay $68 per licensed employee.
For insurance brokers and stockbrokers, the tax is also $684 plus $68 for each associated employee or contractor.
However, for real estate agents, the flat tax increases to $228 over three years. Real estate agents would also pay $68 per qualifying employee or contractor.
housing and shelter
Businesses that offer residential real estate for rental currently pay an annual business tax to the city of $25, plus $1.75 for each rental unit they own after the first four.
Hotels and motels pay an annual BOT of $50 per location plus $0.75 for each unit beyond the first four.
Measure C would increase the annual BOT for residential landlords to $50, but to $2.85 per unit after the first unit.
Hotels and motels will pay $114 and $2.85 per unit after the first unit.
Contractor
A contractor, as defined by the city here, is “any person who engages in any type of business activity as a contractor that requires a city building permit,” and although there will be no change in fees, we will take the measures described below. Affected by the second part of C.
cannabis related business
Cannabis-related businesses are completely unaffected by Measure C.
Other business
All other businesses pay taxes based on their gross income.
According to last year's city report, 20,878 of the city's 24,627 businesses paid based on gross receipts. This total does not include construction.
The report noted that the gross revenue category accounted for the overwhelming majority (84%) of the revenue generated by BOT taxes in the 2022-2023 financial year.
Currently, businesses with gross receipts of less than $10,000 per year pay a flat rate tax of $30 to the city. If a company earns more than $10,000, he pays $0.0004 to $30 for every $1 of gross revenue over $10,000.
If Measure C is approved, the threshold would increase tenfold to $100,000 and the flat tax would increase from $30 to $50. The rate remains unchanged at $0.0004 for every dollar above the threshold.
Changing the upper limit amount
Currently, the maximum amount of taxes most businesses must pay to the city is $5,000.
Measure C would raise the five-year tax liability cap to $125,000, and then adjust it annually for inflation.
As an example of the most common tax category, businesses with gross receipts of approximately $12.4 million would hit the current $5,000 cap and pay the same amount as businesses with gross receipts of $100 million or more.
Under Measure C, companies would need to have approximately $312.4 million in gross revenue to reach the new $125,000 cap.
Only 10 companies in Sacramento have total revenues of more than $300 million, according to a city report.
