The
election that just passed was not only about the presidential campaigns but
also about state measures. An important measure that will help our rapidly
changing society is California Proposition 39. Proposition 39 closes a loophole
that allows companies to choose how they are taxed. The loophole was "created"
in mid-February of 2009 as the result of a last minute, middle of the night
decision made by corporate lobbyists in the California budget negotiations of
2009 (latimes.com). The loophole allows corporations to decide how they would
like to be taxed. Pre-Prop 39, corporations could choose to be taxed via the “Three-Factor Method” or via the “Single Sales Factor Method”. The single sales factor
method looks at and taxes the in-state sales alone to determine a company’s taxes. The three factor method uses a combination of the
company’s: sales, employees, and
property to calculate their taxes (ballotpedia.org). This choice and these two
options give out of state corporations that do not have a physical presence in
California a huge savings. So, many out of state companies choose the “Three-Factor Method”. Since companies that have
some physical presence in California see the tax break that these out of state
companies are getting, more and more companies such as, Chrysler, are moving
their operations out of state. If you could still receive the business of
Californians while paying less in taxes, then why wouldn’t you move out of state?
The solution to this problem is Proposition 39, sponsored by
billionaire hedge fund manager Tom Steyer. Prop 39 will not only close the
loophole that is costing the state of California $1 billion annually in lost
corporate tax revenue, but it will go a step further and use the additional
revenue to reduce public energy costs and to help develop California’s clean energy infrastructure. By boosting this alternative
energy solution, approximately 20,000 to 30,000 jobs will be created in the
process. The long term revenue will help fund California’s schools and reduce the budget deficit. Increased funding
will be made available to services such as health and social care, education,
and transportation (cleanenergyjobsact.com).
I, myself, am a huge proponent of Proposition 39, because
it eliminates a sly, sneaky, injustice that was created intentionally.
California workers have experienced more unemployment than necessary due to the
immoral actions of these corporate lobbyists. Finally, the corporate tax
loophole problem will be solved after the passing of this proposition. What I
like about this proposition is that it goes above and beyond just closing the
loophole, it improves our state. Energy and education are two areas that our
state needs help in. Clean energy is going to come at a premium later on, so it
is a positive that we are investing in clean energy now. Everyone knows that
California’s education is struggling, so
this increased funding is much needed. I would tell you to go out and vote in
favor of Prop 39, but thankfully it has already passed!
http://articles.latimes.com/2012/may/02/local/la-me-cap-taxes-20120503
