Ding, dong, tax bill is dead!

Sept. 1, 2012

Katy Grimes:

The California Senate killed Assembly Speaker John Pérez’s AB 1500, which would have taxed out-of-state businesses. Ding dong, one more tax measure is dead… for now.

Perez worked like a mad man on Friday to try and nab enough Republican support for his “middle class scholarship” bill. But it wasn’t about the scholarship–it was just one more attempt to tax businesses for another type of California welfare program.

When Perez saw that he didn’t have the votes at the eleventh hour, he gave in.

Single Sales Factor

AB 1500 was a $1 billion tax increase on out-of-state businesses that create jobs, pay taxes on their property, sales and payroll receipts, and have thousands of employees in California.

As California Employers Against Higher Taxes correctly pointed out, “Proposition 24 sought to make this change in 2010, and California voters overwhelmingly rejected it by two million votes.”

Perez said that a tax loophole is costing California $1 billion per year. But it was not really a loophole: Until the 2011 tax year, corporations had been calculating income taxes using property, payroll and sales for more than 40 years. AB 1500 would have removed the traditional tax calculation, and taxed companies solely on income.

According to the California Manufacturers and Technology Association, far too many businesses that employ thousands of Californians would pay more taxes under a mandatory Single Sales Factor, regardless of where they are headquartered.

According to The Tax Foundation, California compares poorly to other states in terms of how its tax climate effects the ability to attract and retain jobs. Only 13 states currently mandate SSF as the sole calculation method. In order to compete nationally, California must do a better job of giving companies a reason to come here, invest here and create jobs.

Under current law, SSF is available for any company for whom it makes sense, and others may elect the traditional formula and pay taxes based on their sales, payroll and property.

Wheeling dealing

“The altered proposal would have exempted tobacco giant Altria from the tax hike, as well as other big corporations. It would have restored the state’s Healthy Families healthcare program for low income children, which was eliminated in the budget Gov. Jerry Brown signed earlier this summer,” the Los Angeles Times reported.

Perez tried his best to wheel and deal, but Republican lawmakers resisted.

California’s free-fall

As California remains mired in one of the worst economic free falls in state history, it clearly was not the time to overturn the bipartisan legislative agreement designed to create jobs, stability and predictability.

Even with concessions and exemptions, Perez was unable to negotiate his way into support for the tax increase–because every legislator in the state has out-of-state businesses residing in his or her district. Jobs and businesses matter more than ever.

The Tax Foundation explains that California’s individual income tax has the second highest rate and one of the most highly progressive structures in the nation. “In 2010, California’s state-level individual income tax collections were $1,229 per person, which ranked 5th highest nationally. Since most small businesses are S Corporations, partnerships, or sole proprietorships, they pay their business taxes at the rates for individuals. That makes California’s taxes on small businesses some of the most burdensome in the nation.”

California’s high tax rates, high land costs, high labor and energy costs, and staggering regulations are disincentive enough for out-of-state companies to invest in the state.

Legislators should be providing more incentives to create jobs, instead of continuing to kill off businesses. This defeat was one small step for mankind.

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  1. Carlin M. Horger
    Carlin M. Horger 1 September, 2012, 11:08

    Until California wises up that the EPA and their enviornmental eco terrorists are taking this state down the road of ruination, what business wants to start a business with the present enviornmental and taxation. When they put things like MTBE in our fuel that turns out to be one of the worst
    things that could have been foisted on this state. They are looking for any excuse to close down a refinery here or there. As far as I am concerned they are the number one enemy of the state, and until they bring about some common sense into their decisions they will remain so. I am tired of being put in a list of importance behind a plant, fish, bird, and now mosquitoes.

    Reply this comment
  2. Ulysses Uhaul
    Ulysses Uhaul 1 September, 2012, 12:38

    Scared ya huh?

    Nothing like a bunch of greedy Republicans fortifying their bunkers!

    Reply this comment
  3. us citizen
    us citizen 1 September, 2012, 17:30

    Im with you Carlin……….these taxes are outrageous and getting to be more so by the day.

    They also need to stop taxing us for buying something OUT of State also. That is just a plain rip off. This makes me sick.

    Reply this comment
  4. Tax Target
    Tax Target 1 September, 2012, 17:38

    Yup Uhaul we’re gonna git ya… we’re coming.. better do something about it..

    Reply this comment
  5. Ulysses Uhaul
    Ulysses Uhaul 1 September, 2012, 19:26

    Moderator I have been threatened…..unwarranted…

    Reply this comment
  6. Rex the Wonder Dog!
    Rex the Wonder Dog! 1 September, 2012, 23:13

    Moderator I have been threatened…..unwarranted…

    Teddy=Biggest wussy this side of the Mississippi 🙂

    Reply this comment
  7. Ulysses Uhaul
    Ulysses Uhaul 2 September, 2012, 08:49

    Poodle if your threatened by a good old boy from Boron you would go spazzzz….threats should receive banishment from CWD!

    Reply this comment
  8. Rex the Wonder Dog!
    Rex the Wonder Dog! 2 September, 2012, 11:40


    BTW what does “spazzzzz” mean????? Did you just make that up Teddy???

    BTW Teddy, you could benefit from this course;
    http://www.time4writing.com/elementary-school/grammar-skills-rules/ 😉

    Reply this comment
  9. Ulysses Uhaul
    Ulysses Uhaul 2 September, 2012, 13:12

    Poodle your were Calif public school educated!

    Reply this comment
  10. Rex the Wonder Dog!
    Rex the Wonder Dog! 2 September, 2012, 23:36

    Teddy-take the course…….money well spent for you.

    Reply this comment

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