Yesterday the Governor and a bipartisan coalition of
legislative leaders announced an agreement on the Governor’s jobs plan. The
agreement closes a tax loophole on out-of-state corporations and provides real
tax relief to small businesses in California.
Specifically, the measure will provide $1 billion in permanent income tax
relief for small business owners by cutting personal income tax, the business
tax and the minimum tax. The bill also provides a permanent sales tax reduction
on manufacturing goods for all industries. The tax relief comes from closing a
tax loophole that allows out-of-state corporations to elect their tax code and
rewards keeping jobs in other states. The loophole is a perverse piece of
policy.
The revenue-neutral proposal passed the Assembly and will be taken up by the
Senate today. It is critically important that Republican and Democrat lawmakers
come together and pass this badly-needed tax reform without delay.
California’s tax policy currently rewards out-of-state corporations for selling
their goods in California but keeping their manufacturing and employee bases
elsewhere. These companies can play games with their taxes year after year
robbing the state of critically-needed funds and denying hard-working families
of good-paying jobs.
Small business desperately needs all the help it can get during these tough
economic times to ensure they can keep their doors open and operate in their
communities. This measure puts California on a level playing field with other
states like Texas and New Jersey where similar policy was put in to place by
Chris Christie and Rick Perry.
California needs jobs. As our unemployment rate shows we can’t afford to wait
any longer to pass meaningful reform. The backbone of our economy is small
business. We must make our state the kind of place where they can expand,
thrive and hire new workers.
The Governor and Assembly, particularly Republicans Nathan Fletcher and Cameron
Smyth, showed real leadership yesterday. If they truly want their actions to
match their words when it comes to helping small business and working families
get out of the hole they’re in, the Senate can and must follow suit.