Prop Zero
The Starting Point for Commentary and Coverage of California Politics

Brown Courts Business for Tax Support

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    NEWSLETTERS

    Big Business has been the latest stop on Democratic Gov. Jerry Brown's statewide Temporary Tax Increase Tour.

    Last week, the governor appeared before the annual Host Breakfast of the California Chamber of Commerce where he asked the members for their help to pass his November ballot proposition.

    If enacted by the voters, the measure would raise sales taxes by a half cent for four years and hike state income taxes between 1 and 3 percent for seven years on income earners making more than $250,000 per year. Note that the ballot proposition asks nothing of businesses in the form of temporary tax increases.

    Rather than resist Brown'e entreaty, the Chamber and its corporate allies should be kissing his feet. That's because no income earning group in California has had a better tax deal over the past couple of decades than business.

    In fact, the state has bent over backwards for business, corporate whining notwithstanding.

    Over the past 30 years, the Legislature has reduced the tax rate for California businesses several times. In 1982, the corporate tax rate was 9.6 percent. Today it stands at 8.84 percent.

    Here's another way of looking at businesses as revenue producers for the state treasury. Whereas in 1978, corporate taxes accounted for 15.4 percent of all general fund revenues; in 2010 corporate taxes totaled 10.7 percent of the take.

    All this adds up to big bucks absent from the state treasury. It also helps to explain part of the cause of the state's budget deficit woes over the past few decades. According to the California Budget Project, if corporations paid taxes at the same rate today as they did 30 years ago, the state would be taking an extra $8.4 billion annually.

    Hmmm.

    That's just about the amount of the remaining deficit if the voters pass Brown's November tax initiative.

    The Chamber and its business partners should be working their tails off for Brown's measure. If they don't and it fails, then tax increase proponents may be looking for businesses to assume responsibility for a larger share of the revenue pie the next time around.

    Larry Gerston teaches political science at San Jose State University and is the political analyst at NBC Bay Area.

    (/blogs/prop-zero)