Coming: A Clash of “Fair Share” Tax Increase Proposals Aimed at Business

Joel Fox
Editor and Co-Publisher of Fox and Hounds Daily

The campaign to make the rich and corporations pay their so-called “fair share” in taxes marches on in California. One can hardly turn around without running into a politician or a spending interest advocate who demands that high-end taxpayers or corporations pay their “fair share” of taxes. In fact, there are so many different variants of the “fair share” tax campaigns that a couple are about to crash into each other.

The latest version of the Fair Share tax increase campaign is SB 37, authored by Sen. Nancy Skinner. It proposes to raise the state corporation tax from 8.84% up to as much as 16.84% depending on a number of factors including the salary of a corporation’s CEO. Like most of the fair share tax increases, the idea is to raise money for education.

Skinner argues that the corporations and their executives made out like bandits with the Trump tax cuts and she wants some of the revenue for the state. The senator says corporate profits are at an all time high. What she didn’t say is that corporate tax dollars to the state are also at an all time high.

Writing an article in CALmatters, California Taxpayers Association president Robert Guiterrez pointed out: “From 1960 to 2018, California’s corporation tax revenue grew from $272 million to $12.2 billion – an increase of more than 4,500 percent. Even after adjusting the 1960 number for inflation, the growth was 535 percent.”

The Golden State’s current income tax rate of 8.84% is the eighth highest of the 44 states that levy a corporate tax.  Should SB 37 pass, California would then own the highest corporate tax rate in the country to go along with the highest income and sales tax rates among the states.

It would seem that California businesses already pay their fair share, but these numbers do not satisfy the spending interests who want more. Considering the success past “fair share” tax campaigns have had in California, it is not a surprise that those wanting more taxes follow this well-worn path.

In 2012, the campaign to raise the state income tax to the highest in the nation was a demand for high-end taxpayers to pay their “fair share.” That tax increase money was mostly supposed to be used for education, too. In fact, you can find the term FAIR SHARE capitalized in the rebuttal argument sent to all Californians in the ballot booklet in support of the Prop 30 tax increase: “Prop. 30 asks the very wealthy to pay their FAIR SHARE to keep classrooms open and cops on the street.”

What will prove fascinating is when “fair share” tax increase campaigns against businesses begin to trip over one another. It’s about to happen. Not only is SB 37 targeting corporations for education tax revenue but so is the split roll property tax initiative on the November 2020 ballot. Advocates for that measure repeat the mantra that corporations must pay their fair share of property taxes.

Corporations and the rich are easy targets for tax raisers because businesses don’t have a vote in tax increase elections and the rich are greatly outnumbered by voters who would not pay the tax.

What will advocates and legislators do when faced with two high profile measures that both purport to seek “fair share” taxes from corporations to help fund education while having to consider the effects of this double whammy on the economy, jobs and businesses’ desire to remain in the state?

This is a new political California. It would not be surprising if they wanted both tax measures to become law.

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