State Sen. Bob Hertzberg looks to raise taxes an additional $11 billion each year by imposing taxing services.
California legislators are once again considering new ways to tax small businesses and consumers. This time it is Sen. Bob Hertzberg who hopes to shore up the state’s volatile budget by raising an additional $11 billion each year by taxing services.
“Not only will small businesses have to pay more for the services they rely on to run their operations, but the cost of sales taxes on services would get passed on by small businesses to their customers, raising the price of their goods against competitors,” warned NFIB’s California State Director John Kabateck. “These added costs and the competitive disadvantages would likely result in some small business closures or flight to other states.”
“But perhaps the most troubling issue with Hertzberg’s tax plan is the inherent flaws with broadening sales taxes to include business-to-business services which causes tax pyramiding,” he continued. “Tax pyramiding is a process where a consumer good is taxed multiple times during the production cycle which artificially increases the cost of that product or service without transparency to the end purchaser.”
NFIB’s California members almost unanimously opposed a sales tax on services. When asked if they support a sales tax on services, 98 percent said no in 2019, 97 percent said no in 2017, and 96 percent said no in 2016.
