Author: George

The California Tax Could Be a Political Football

The California Tax Could Be a Political Football

Editorial: Corporations keep trying to throw out progressive California laws. Do we need reforms?

In San Francisco, a small but vocal group of activists have been using every trick they can think of to force the state of California to give up on a business tax that would put even more money in the pockets of everyday Californians.

With little fanfare, the California Department of Taxation and Finance last month quietly released a controversial draft of the tax, which would lower taxes on businesses that add workers from out of state and out of the country so as to maximize tax revenues by using the California tax code.

The idea is to end what is known as “expatriation”—the practice by multinational corporations of shifting profits and jobs out of the country to lower their tax bills in California while keeping the tax benefits flowing back to their home countries.

It may be a good idea, which the Business Roundtable has already supported. But now, as California takes on the most ambitious business tax overhaul since President Ronald Regan, the tax could be even more of a political football. The state Board of Equalization can’t easily change this tax to something else without running afoul of some laws.

So groups opposing the tax have become inventive in exploiting the process in ways that could damage both state and federal tax collections.

The state’s tax commission, led by two tax lobbyists, has issued at least four draft versions of the tax—each with its own changes and deletions—and a preliminary proposal to the full Board of Equalization, which has yet to finalize what the tax should be. All the draft versions have already made their way into the hands of various interest groups, while the preliminary proposal has gone to the California Tax Reform Association. This organization is supported by major corporations and their front groups in California, and it’s also receiving significant funding from the Koch brothers and other well-known right-wingers.

So the current situation doesn’t appear to be a matter that can be resolved in the usual way. But with the Board of Equalization currently debating the tax, if it changes the draft version to one that can’t pass muster with local and state tax officials—or even if a tax reform advocate or a local city government gets involved—the state could be forced to take action.

On top of that, in the interim,

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