The Chamber Governmental Relation Committee Discussed Several Bills at this Month’s Meeting

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AB 1701 (Thurmond/Fletcher).  The bill would require a building contractor to be liable for wages which were not paid by a subcontractor.  Civil actions for violations could be brought by the Labor Commissioner, the worker or a joint labor-management cooperation committee.  State or government employees would be exempt from the law.  State Chamber says this is remedy for a non-problem, and that litigation to remedy non-payment by a subcontractor would be lengthy and costly. The committee unanimously voted against the bill, and agreed to sign onto a State Chamber sponsored opposition coalition.

SB 567 (Lara).  The bill would require family members who inherit business/property to pay capital gains on the property if family members have an adjusted gross income of $1 million or more.  In other words, top earners in the state would not get the benefit of the federal step-up in value.  The bill would also eliminate the current deduction allowed for compensation paid to executive officers for achieving performance based goals.  This would encourage companies to leave California.  The IRS already has strict rules on performance based goals: there must be (1) written objective performance goals that are substantially uncertain to be reached when the goals are established; (2) the goals must be approved by a compensation committee comprised of two or more outside/independent directors; and (3) the goals must be approved by shareholders.
The committee unanimous opposed the bill on the ground that it might encourage high income executives to leave the state, which receives a substantial percentage of its income from such persons.  The bill is currently inactive.

AB 479 (Gonzalez Fletcher and Garcia) – The bills would exempt from existing sales and use tax laws wearable incontinence supplies used by infants, children and adults, and women’s sanitary products.  The bill would add a surtax and related floor stock tax on alcohol products. $.16 per gallon on beer, $.18-$.19 on wine per gallon, $.18 on hard cider per gallon and $1.30 on distilled spirits per gallon.  The taxes would raise $75 million.  State Chamber says the losses to retail sales would be $170 million and 2,400 people would lose jobs as a result of the decline in sales.  Current tax on distilled products is $3.30, which would rise to $4.50 per gallon.  Taxes on distilled spirits is 54% of the retail price.   
The bill was unanimously opposed.  Current status is that it failed passage in the Assembly but was granted reconsideration.  The committee will monitor any future votes on the bill.