Understanding the Consequences: A Professional Services Tax Is Bad Business.

AuthorPugliese, Anthony

In my opinion, as we start the new year focusing on the realization of our goals--especially professional ones--CalCPA will continue to remain vigilant in its efforts to support a fair and supportive business environment for CPAs practicing in California.

One of the strengths of the profession is our foresight and vision to look just beyond the curve of the horizon to identify and analyze emerging challenges and opportunities that could impact our services and the clients and employers we serve. In a similar fashion, CalCPA looks out beyond the horizon to identify and help shape the road ahead for the profession so our members are supported and put into a position to succeed.

With that in mind, we are keeping a close eye on the growing threat of a professional services tax-including CPA services. Rest assured CalCPA and our strategic business partners have been working diligently to move into the best possible position and address any services tax threat that materializes.

This is an important topic for the corning year. CalCPA will continue to advocate for our members. We will continue to serve as strategic advisers to business owners in helping them open new economic opportunities and create new jobs to support our local communities. Consequently, CPAs don't need to be disrupted by unnecessary proposals that negatively impact their ability to provide the high-quality services their clients and employers expect.

Imposing an extremely complex shift in the tax burden by taxing CPAs and other professionals in California is not only bad tax policy, it needlessly compounds an already complicated tax code and introduces substantial compliance challenges for service providers, taxpayers and government regulators.

We also know the consequences of such a tax would reach far beyond the business services sector. The addition of a professional services tax only exasperates a challenging business climate and places much of the tax burden squarely on the shoulders of consumers across California.

A recent economic study of the issue by the California Tax & Budget Research Project (cataxandbudgetproject.com) found that a 5 percent sales tax would translate to an effective tax rate of 6.1 percent to 8.1 percent to the consumer. Think of all the services that go into the development of the products and services that a consumer would purchase. Think about what a 5 percent service tax would mean.

If you tax the architecture, engineering, legal and accounting...

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