Los Gatos Poised To Enact Town's First Business Tax Hike Since 1991

BY ELI WALSH

LOS GATOS, CA — The town of Los Gatos appeared poised to raise its business tax rate for the first time in more than 30 years according to unofficial results from Tuesday's election.

Just over 54 percent of Los Gatos voters had favored the town's Measure J as of Wednesday evening, which would increase the town's base business tax rate by 30 percent for businesses with more than $50,000 in annual gross receipts.

Los Gatos' business tax structure has remained static since 1991.

The town's tax rate for businesses with more than $50,000 in gross receipts would also be increased by 40 percent, while e-commerce businesses would be added to the town's "manufacturing, wholesaling and jobbing" tax category.

That category's tax rate would also be increased by 120 percent, and the change would chiefly affect the subscription video streaming and production company Netflix, which is headquartered in Los Gatos.

Town officials estimated earlier this year that the tax increases will generate roughly $1.2 million per year and will make the town's tax structure more progressive, with larger businesses paying a higher tax rate.

Under the city's current regressive structure, a business with more than $1 million in gross receipts has a lower tax rate than a business with roughly $50,000 in gross receipts.

Town officials have also argued that the tax increases will help Los Gatos shore up its annual forecasted budget deficit of roughly $4 million per year over the next five fiscal years.

All 14 of the town's precincts are reporting results, according to the county's Registrar of Voters. A simple majority is required for Measure J to be adopted.

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