SB 1372 Summary

• Revises California corporation tax rates for publicly held corporations beginning January 1, 2015, replacing the flat 8.84% rate with a variable rate from 7% to 13% based on the corporation's compensation ratio (ratio of highest-paid executive compensation to median employee compensation).

• Increases the applicable tax rate by 50% for corporations that reduce U.S. full-time employees by more than 10% while increasing contracted or foreign employees in the same period.

• Establishes a new tax credit under the California Competes Tax Credit Committee for qualified taxpayers with compensation ratios between zero and 100, with credit amounts determined by written agreement based on job creation/retention, employee compensation, and in-state investment.

• Limits total tax credits to an amount equal to the revenue generated from applying the new tax rates to publicly held corporations, with 25% of available credits reserved annually for small businesses and no single taxpayer receiving more than 20% of available credits.

• Requires the Franchise Tax Board to issue annual estimates of available qualified amounts and GO-Biz to adopt regulations and negotiate credit agreements subject to committee approval.