Background
Currently, the City uses a business tax formula that was adopted in 1976. It requires each business to pay an amount based on its relevant industry (e.g. "retail," "manufacturing," "beauty salon," etc.) and its number of employees. Neither the rates nor the categories of businesses have been updated since.
Proposal
If approved, Measure K would replace the existing per-employee formula with a gross receipts model. Each business would pay a tax based on the gross receipts it earned from operating in Milpitas. Gross receipts (as defined in the ordinance) include all money that a business takes in, without deducting expenses. It does not include things like refunds or deposits that the business does not examine.
Each business would pay a flat rate ranging from $25 to $400 based on the tier in which its gross receipts fall. Additionally, businesses making more than $700,000 would pay a rate ranging from 0.025% to 0.035% of that portion of their gross receipts falling in the top three tiers. The flat rate would increase automatically each year with inflation.
The ordinance also includes provisions governing the administration of the tax, including processes for annual collection, delinquencies, penalties and interest, appeals and refunds, inspection and audit, and enforcement. It specifies certain businesses, like non-profits, that are exempt from the tax. If approved, the new tax would go into effect January 1, 2028.
Source: Measure K Impartial Analysis