The Repeal Corporate Tax Loopholes Act qualified for the November ballot on June 24, 2010. It was the 7th measure to qualify for the 2010 general election. This measure would repeal corporate tax measure loopholes. If it is passed, tax breaks for corporations that are scheduled to take effect in 2010 and 2012 would be halted. Thus, at stake for certain corporations is an annual tax break of $2.5 billion. California lawmakers approved these tax breaks, as did Governor Schwarzenegger, during budget negotiations in 2008. The specific tax breaks that will be affected by this measure include: sharing tax credits, allowing multi-state corporations to choose whether they will be taxed on property, payroll or sales, and carrying back losses. The official ballot title states: “Repeals Recent Legislation That Would Allow Businesses to Carry Back Losses, Share Tax Credits, and Use a Sales-Based Income Calculation to Lower Taxable Income. Initiative Statute.” The official ballot description is as follows:
“Repeals recent legislation that would allow businesses to shift operating losses to prior tax years and that would extend the period permitted to shift operating losses to future tax years. Repeals recent legislation that would allow corporations to share tax credits with affiliated corporations. Repeals recent legislation that would allow multistate businesses to use a sales-based income calculation, rather than a combination property-, payroll- and sales-based income calculation. Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local government: Annual state revenue increase from business taxes of about $1.7 billion when fully phased in, beginning in 2011-12. (09-0058.)”
Supporters: The California Teachers Association has been the primary supporter and financier of the measure. The CTA outlines the goals of the initiative as follows:
- The initiative repeals a law that would allow businesses to shift operating losses to prior tax years and that would extend the period permitted to shift operating losses to future tax years.
- It repeals a law that would allow corporations to share tax credits with affiliated corporations.
- It repeals a law that would allow multistate businesses to use a sales-based income calculation, rather than a combination property-, payroll- and sales-based income calculation.
Their arguments in favor of its passage include: “The Repeal Corporate Tax Loopholes Act overturns a law that lets big businesses benefit from years-old losses, allows their use of unearned tax credits, and lets them pick-and-choose beneficial tax formulas to lower their taxable income. That’s not paying their fair share."
Opponents: A group entitled “Stop the Jobs Tax” has formed in opposition to this measure. Allan Zaremberg is the president and CEO of CalChamber, is also against this initiative. The campaign against the measure argues on its website that “The Jobs Tax Initiative would repeal recent state tax updates that are desperately needed to grow our economy and put Californians back to work. At a time when two million Californians are out of work, the initiative taxes new job creation, hits California employers and small businesses with higher taxes and stifles job growth in our most promising industries. It would lead to fewer jobs and fewer tax revenues.”
View the full text of the measure here.
View the web site in support here.
View the web site against the initiative here.
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