UC Law Constitutional Quarterly


The business net receipts tax ("BNRT"), the centerpiece proposal of the Commission on the 21st Century Economy, is seriously flawed and should not be considered seriously. The BNRT exhibits the well-known defects of a subtraction method VAT. Sales-only apportionment would not achieve the desired effects of destination-based taxation in many important cases. If enacted, the BNRT is likely to be subject to both tax planning (including the substitution of independent contractors for employees and reclassification of employees as independent contractors) and legal challenges, and to be unpopular with California business and labor.