CPA Day success: legislators, members enjoy annual meeting of minds.

• Author: Allen, Bruce C.
• Position: Capitol Beat

Jan. 21 marked another successful CPA Day at the Capitol, as more than 230 CalCPA members traveled from all over California to Sacramento. Members met with legislators and their staff to discuss important issues facing the CPA profession and California's business community, as well as to convey the valuable services CPAs provide to constituents in the legislators' communities.

In addition to introducing themselves as the face of the CPA profession in California, CalCPA members discussed some important issues and concerns with legislation dealing with sales tax on services, the California Board of Accountancy's sunset review process and CalCPA's financial literacy programs with legislators.

The focal point of this year's meetings with legislators was a newly introduced, sales tax on services proposal. Sen. Hertzberg introduced Senate Bill 8 this legislative session, which intends to broaden the tax base by imposing a sales tax on services--including those provided by CPAs--and phase in a lowering of the corporate and personal income tax. The new tax seeks to raise $10 billion annually that will be directed toward education, local governments, an earned-income tax credit for low-income families and incentivize an increased minimum wage.

SB 8 is being pitched as a way to broaden the tax base and lower the rates to address a volatile tax system. However, SB 8 imposes an extremely complex shift in the tax burden to raise billions in new tax revenue for dedicated spending plans that have yet to be fully articulated. Furthermore, the lowering of the personal income tax and corporate tax rates may not be fully realized, as the reduction hinges on a complex tax on services plan that has been unsuccessful in a number of other states.

While many questions remain about the bill's specifics, it has garnered the attention from various professions and service providers. Stakeholders are beginning to meet with Hertzberg to share their concerns with the proposal and understand what he hopes to accomplish with this legislation. As the legislative session ramps up, questions about whether the political momentum exists to move this bill forward will be answered.

However, SB 8 does seem to be laying the groundwork for an extended discussion of whether sales tax on services should be part of any tax discussion in California.

In the coming months, Hertzberg plans to hold several hearings across the state to discuss his proposal. CalCPA will continue participate...