The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

California’s Tax Break Honey Pot

Apr 29, 2019

California would collect 16 billion dollars more in taxes this year if it weren’t for corporate tax breaks, according to the California Finance Department.

Out of this amount, 6.6 billion dollars alone go to companies’ coffers as a result of corporate tax loopholes. The so-called “water’s edge provision,” for example, which allows certain companies to choose their method of taxation, amounts to a 2.2-billion-dollar gift to multinational corporations. Another big gift to big business is the research and development tax credit, to the tune of 1.6 billion dollars.

Then there are the sales tax exemptions–like the one on animals and plants used for food, which adds up to 634 million dollars; or the 172-million-dollar one for farm equipment; or the exemption for computer software, which state officials estimate is more than 100 million dollars a year. All together, the Finance Department says, state sales tax exemptions add up to 9.6 billion dollars.

But that’s only the beginning. The state’s income tax loopholes amount to 49 billion dollars this year! How much of it is gobbled up by big business? We are not told a figure. But we know that only about 8 percent of it, or four billion dollars, goes to homeowners–which indicates, no doubt, that tens of billions of dollars more in handouts are also ending up in the coffers of some big companies.

It takes a simple majority vote in the California legislature to pass a tax break, but a two-thirds vote is needed to cancel it–which, by itself, tells you what your elected representatives do in Sacramento. They shovel billions of dollars of tax money to big capitalists, while they starve the state’s public schools, neglect the maintenance of the state’s infrastructure, and cut back on practically every service the state is supposed to provide to the population.