(Updated with action items. – promoted by Brian Leubitz)
UPDATE: The Cal Labor Federation has set up an online petition and a Facebook group to oppose the corporate tax cut. Hit ’em both up.
David Dayen has been tracking the status of the corporate tax cuts that will net a very small number of corporations a very large tax savings, even pointing out programs that could be saved if we eliminated this corporate tax shelter. Slowly, but steadily the story of this little escapade of corporate indulgence in a period of desperate economic straits.
During the state’s last two budget impasses — when the Legislature slashed $20 billion from its budget in the face of massive deficits — many said there were no winners in the process. But some did win, and win big, according to a recent report from the non-partisan, nonprofit California Budget Project.
As a part of its September 2008 and February 2009 budget deals, the Legislature enacted three changes to California’s corporate income tax laws that departed from long-standing policies and will result in an estimated $640 million hit to this fiscal year’s budget and, at full implementation, an expected annual revenue loss of $2 billion. It will also mean millions in annual savings for some of the state’s largest corporations.
The changes — which allow corporations to choose between two methods of determining their taxable income, to share tax credits and to claim refunds on previous years’ taxes — were enacted without any public hearings or public testimony. (Times-Standard 6/11/09)
The elective sales factor, as this cut is known, is a tax cut. There is no other way to describe it. It is selfish and short-sighted. Do its supporters, like Walt Disney, Apple, and Intel, really think that they can function in a California without basic services? Do the Silicon Valley companies think they can continue to hire good talent when our universities crumble and when our public infrastructure makes living in the region unmanageable? Or are they content to play California off other states in budget crisis mode to beat down the level of government.
While these corporations are talking about a simple procedural option, the fact is that this is new. Other states do not allow this elective sales factor option. It makes California something of a tax haven, and in a time when we are cutting education to unprecedented levels, it makes no sense. From both a fairness and a fiscal perspective, allowing this tax cut to take place is sheer madness.
This tax cut must be first in line on the chopping block. While the Republicans will pretend that this is somehow a natural born right for all corporations, these are not popular tax breaks. We have room here to push, and we must do our best to make it clear to every Californian how this came about and how it must end. A large coalition of labor, good government, child welfare, and seniors groups have joined to issue a letter to Legislative leadership saying pretty much that:
There must be no more budget cuts until corporate tax cuts are shut down. The most recent corporate tax breaks give away $2.5 billion a year, every year, permanently, to a handful of the world’s largest corporations.
These times are challenging. We understand that you face tough choices. But you do have choices. The $2.5 billion in unnecessary corporate tax giveaways could be used instead to help keep teachers in the classroom, public safety personnel on duty, infrastructure projects moving, and our treasured state parks open.
So, the question to the Legislature is then, do you represent corporations or Californians?
Full letter over the flip.
Dear Senators Steinberg and Hollingsworth and Assemblymembers Bass and Blakeslee:
There must be no more budget cuts until corporate tax cuts are shut down. The most recent corporate tax breaks give away $2.5 billion a year, every year, permanently, to a handful of the world’s largest corporations.
These times are challenging. We understand that you face tough choices. But you do have choices. The $2.5 billion in unnecessary corporate tax giveaways could be used instead to help keep teachers in the classroom, public safety personnel on duty, infrastructure projects moving, and our treasured state parks open. It would mean fewer of our most vulnerable citizens – children, seniors and the disabled – go without the services they desperately need.
These egregious giveaways have no value to the state or the majority of its businesses. Tax cuts like the elective single sales factor, tax credit sharing, and net operating loss carrybacks not only weaken our state in the current crisis, they will create a bigger budget gap in future years. And these tax giveaways do nothing to help create jobs or soften the economic blow so many families are facing.
Fairness dictates that everyone shares in the pain. And that includes some of the world’s wealthiest corporations. Before considering additional cuts to programs Californians care so deeply about, we ask that you shut down these corporate tax giveaways.
Sincerely,
California Labor Federation
ACORN
American Federation of State, County and Municipal Employees (AFSCME)
Asian Pacific American Legal Center
Asian Pacific Environmental Network (APEN)
Association of California State Supervisors
California Alliance for Retired Americans (CARA)
California Budget Project (CBP)
California Church IMPACT
California Conference Board of the Amalgamated Transit Union
California Conference of Machinists
California Faculty Association (CFA)
California Federation of Interpreters
California Federation of Teachers (CFT)
California League of Conservation Voters
California Nevada Conference of Operating Engineers
California Nurses Association (CNA)
California Pan-Ethnic Health Network
California Partnership
California Primary Care Association
California Professional Firefighters (CPF)
California Reinvestment Coalition
California Rural Legal Assistance Foundation (CRLAF)
California School Employees Association
California State Employees Association
California Tax Reform Association
California Teamsters Public Affairs Council
California WIC Association
California/Nevada Community Action Partnership
CALPIRG
Center for Environmental Health
Child Care Law Center
Children’s Defense Fund-California
Coalition for Humane Immigrant Rights of Los Angeles (CHIRLA)
Coalition of California Welfare Rights Organizations, Inc.
Communication Workers of America, District 9
Congress of California Seniors
Consumer Attorneys of California
Consumer Federation of California
Consumer Watchdog
Consumers for Automobile Reliability and Safety
Friends Committee on Legislation of California
Glendale City Employees Association
Guam Communications Network
Having Our Say Coalition
Health Access California
International Longshore and Warehouse Union, Northern California District Council
International Longshore and Warehouse Union, Southern California District Council
JERICHO, a Voice for Justice
Latino Health Alliance
Lutheran Office of Public Policy – California
Madera Coalition for Community Justice
National Lawyers Guild Labor & Employment Committee
National Lawyers Guild, Los Angeles Chapter
Older Women’s League of California
Organization of SMUD Employees
Parent Voices
Professional and Technical Engineers, IFPTE Local 21, AFL-CIO
Public Advocates Inc.
Rural Community Assistance Corp
San Bernardino Public Employees Association
San Luis Obispo County Employees Association
Santa Rosa City Employees Association
Service Employees International Union, Local 1000
Services, Immigrant Rights, and Education Network (SIREN)
State Building and Construction Trades Council (SBCTC)
Time for Change Foundation
UAW Local 2865
UAW Local 4123
UNITE-HERE
United Food and Commercial Workers, Western States Council (UFCW)
United Transportation Union (UTU)
UPTE-CWA, Local 9119
Western Center on Law and Poverty
Women’s Foundation of California
Cc: Governor Arnold Schwarzenegger
I think many of these cuts were made by reason of some nice lobbying and payoffs done by the corporations over the democrat led legislature. The legislators will need this money going into reapportionment in 2010, so a revision of corporate tax breaks bought and paid for is unlikely.
Thank you for this posting. I wasnt’ aware of this part of the February budget deal and it is clearly not the kind of thing that will make our tax system more fair or that might stimulate the economy. It needs to disappear.
the dems and repubs in the legislature passed a budget which was a joke and left it up to the voters to cover. the voters rejected it.
if there was real competition in the districts, the dems and repubs would never have passed it, but the special interests got in and said here is a way to keep your jobs for the next cycle and pass a budget.
Davis and Berman’s brother reapportioned California to give max advantage to the dems, and left republicans with only a toehold. It is the deal that killed california – not a single assembly member will ever lose a job under the current system, so they take the most disastrous steps to just get a budget passed.
I blame the dems more since they are over 60% of the problem. The republicans hold a special evil place for imposing their values on others.
This is generally a good tactic. The question now is one of execution.
I’d argue that we should take a limited number of the more egregious corporate tax breaks, and pound on them consistently and via as many channels of communication as we can.
We should also remember good advice from the past. As Saul Alinsky used to put it:
My person favorites for this:
We spend too much on the “cuts hurt the poor” meme, which while true, is vastly over-used, and does not necessary generate the public anger it might have in the past. Also, this meme lacks a clear “villain”.
And remember:
Let’s pull aside the curtain these jokers are hiding behind, and goad them into reacting in public.
I should have said “correct” as the right does not often show up here.
As for the Corporate Tax issue.. I have not seen anyone do that strongly since Peter Camejo did in in the Gray Davis Recall debates. He had the numbers then and no one did anything.
mbayrob is telling the truth. It is time to raise the ante and take them all on. Each of these votes should be challenged and everyone who voted for the budgets that contained them should be asked to explain it, no matter which party they say they belong to.
Finally, the yacht party is already on the warpath. Grover Norquist’s Americans for Tax Reform is already sending people to a new Chuck DeVore anti-tax web site and getting to be very specific about what is at stake. With Norquist writing the script and his ex-aide Ron Nehring running the Calif. Republican Party, you know how they will go. DeVore’s list is very specific about things like not taxing CA Oil. It is also very specific in making AFSCME the villain. It is time that they got a taste of their own medicine.