AB 71 was introduced earlier this year (see our prior coverage here) to provide additional state funding for homelessness programs, derived – in part – from increasing taxes on business income. In March, AB 71 was amended to eliminate steep corporate tax increases. The bill as amended, however, still would require corporate taxpayers that make a water’s-edge election to include in gross income 50% of the global intangible low-taxed income and 40% of the repatriation income of affiliated corporations. But, the bill does not allow these taxpayers to take into account the apportionment factors of those affiliated corporations. For calendar year 2022 only, the bill would allow a taxpayer to revoke its water’s-edge election.
On April 20, the Assembly Committee on Revenue and Taxation held a public hearing on AB 71, where significant testimony was provided on both sides. After a lengthy debate by the Committee, the bill received a “do pass” recommendation by a vote of 7 to 4. With that, the bill was re-referred to the Housing and Community Development Committee, which will hold a public hearing on the bill on April 29.