Why the Green Party Endorses Proposition 39

The corporate welfare tax loophole was the result a last-minute, middle-of-the-night-deal at the end of the 2009 budget negotiations in Sacramento, that gives an unfair advantage to out-of-state corporations that create few jobs in California. Prop 39 would eliminate this loophole.

 

Historically in California, corporate taxes have been calculated on a formula that considered three factors: a company’s sales, workforce and property. But the loophole allows out-of-state corporations to use whichever of the three factors costs them less. This means these corporations can pay taxes based on the amount of business they do in our state, or they can pay taxes based on the number of buildings and employees they have here. This means companies that employ few people here. but have plenty of sales in the state do well by our tax system, and companies with significant operations and large workforces in California are handicapped.

 

The result is that this loophole now costs our state budget $1 billion per year of lost revenue and tens of thousands of lost jobs.

 

Prop 39 will fix this problem by requiring out-of-state companies to pay taxes based on their sales in California (the “single sales factor”). By closing the loophole that rewards corporations that locate jobs and investments in other states,  the state's Legislative Analyst's office estimates this will create a net gain of 40,000 jobs in California by generating an incentive to create, bring and keep jobs in California. It would also bring in an estimated $500 million in additional state General Fund revenues in the first year and $1 billion a year thereafter.

 

Prop 39 would render a second major benefit by dedicating a portion of the increased revenues  to energy efficiency programs that will create jobs and reduce public energy costs for years to come. Sixty percent of the revenue for the first five years going into clean energy retrofitting of existing buildings, creating up to 30,000 new additional jobs. After five years, all such revenue would go directly into the general fund.

 

Although the Green Party generally does not support ballot box budgeting, this dedication of funds into energy efficiency programs is for a period of limited duration. Given the emergency nature of addressing climate change  and the lack of sufficient federal response, the Green Party believes that the need for our state to do something now justifies this dedication of funds. The increase in green jobs also addresses our state's high unemployment in the best way by promoting the jobs of the future.

 

For all these reasons, the Green Party endorses Prop 39.