Oakland Proposes New Business Tax Model

Oakland voters will get to decide in 2022 if the city should change the way it taxes business as result of a unanimous vote of the City Council Tuesday.
In its current form, the City’s business tax structure is flat, meaning that a business with $10 million in revenue is taxed at the same rate as a business with $100,000 in revenue. Under the proposed new structure, the tax rate will be based on the annual gross revenue of the business.

The legislation maintains the current business categories that are charged different tax percentages. That is, grocers will continue to be charged a different gross receipts tax rate than retail stores which have a different rate than car dealers. Overall there are 13 different categories of businesses, each with different tax rates. This business classification mechanism exists in the current tax system.  

What is new in the proposal law is that the tax rates percentages would be different depending on the organization’s annual gross receipts. There would be different tax rates for those businesses with gross receipts less than $1 million, $1m - $2.5m, $2.5m -$25m, $25m-$50m, and over $50 million. Businesses earning less than $250,000 would pay a flat rate of $100.

Tuesday’s legislation also creates a Blue Ribbon Commission to study impacts of the changes to the tax rates and recommend to the City Council possible changes to the rates.

For more information, check out the Oakland City Council’s Agenda Report on the issue and the proponents’ additional description. These documents contain detailed information about the proposed tax rates for all types of businesses in Oakland.