State Senate tells corporations to hire or give back tax breaks
June 2, 2011
• Would be held accountable for credits
• ‘If you are a Wall Street bank or big corporation … no one asks any questions’
Companies given tax breaks in exchange for promises to create jobs would have to give back the credits if they didn’t fulfill their promises under a bill that was approved narrowly by the California state Senate Wednesday.
SB 364 by Sen. Leland Yee, D-San Francisco, was approved on a 22-17 vote.
“A working mother on CalWORKS or disabled senior receiving in-home supportive services has to jump through numerous bureaucratic hoops to receive minimal life-sustaining benefits, but if you are a Wall Street bank or big corporation looking for scarce tax credits, no one asks any questions,” says Mr. Yee. “California taxpayers deserve better.”
He says the legislation would create jobs and could save taxpayers billions of dollars.
Tax expenditures for corporations are often created with the argument that they will create jobs and fuel economic development. Yet under existing law, says Mr. Yee, it is nearly impossible to track which companies are receiving tax credits and if those subsidies are meeting the goals of the expenditure. Corporations are even permitted to take taxpayer money and relocate to other states.
“It is wrong for California to provide upwards of $14 billion in corporate tax credits without transparency and accountability,” says Mr. Yee. “If a business fails to keep its word, or in some cases even moves out of the state, taxpayers should not have to foot the bill.”
If it makes it into law, California would join 20 other states that have implemented similar corporate accountability for tax expenditures laws, including neighboring Arizona and Nevada.