What is the Next Step for State Taxes?

          After the federal changes made by the Tax Cuts and Jobs Act, many people are looking to see what moves their states will make. Some states have a relatively simple tax system (no state income tax or low property tax), and they want to keep it that way. Other states made their own changes that impacted tax collection in 2018. For example, Kentucky made adjustments that now allow for more taxes to be collected from the activities of non-profits.

          Then there are the other states that want to do something but are not sure what. The state of California can fall into this category. The last major change to the state tax code occurred in 1935, and property tax has been limited since 1978 due to voter passed Proposition 13. This means that the majority of California’s income comes from personal income taxes. With its progressive nature, those who make the most, also pay the most. That is also true of businesses.

          In addition, there are local sales taxes that are being applied to different businesses. Some see this time as an opportunity to change the state tax code. Considering the times we are living in, nothing is impossible. All of us need to pay close attention to how things develop over the coming year. We cannot hold on to the past, when the future is only getting closer.

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