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“Unions Already Looking to Repeal Portions of Budget Deal”

From Capitol Weekly, “Unions already looking to repeal portions of budget deal”:

Monday morning, an email was being circulated from Lenny Goldberg of the California Tax Reform Association warning allies of the details in the budget deal.

“In exchange for a small amount of temporary short-term revenues, the Legislature is poised to open two vast new loopholes in the corporation tax, loopholes which will continue indefinitely,” the email stated. “The impact will be to greatly diminish the corporation tax at future costs to education, health care, and public safety. This is a huge giveaway to multinational corporations.”

Specifically, Goldberg focused on a provision that would allow corporations to exchange tax credits among different companies under the same corporate umbrella. Under current law, the state requires tax credits be taken by the specific corporation that is applying for the credit.

The change was one of the provisions requested by Republicans during budget negotiations, said Democratic sources.

“There are many billions in unused credits from companies that have not earned sufficient profit to use them,” writes Goldberg. “This proposal will open the ability of companies to effectively sell these credits—e.g. by allowing ownership by another company—so that the billions in unused credits can now be used by profitable corporations.”

Goldberg estimates this change could cost the state “billions per year and will total many billions over the years.

“These new loopholes will effectively mean the death of the corporation tax as an effective revenue-raiser. This deal compromises future generations, and does not even receive any real revenues in return. Borrowing from the future is bad enough. Giving away the future to multinational corporations is unconscionable.”

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