Undoing an “Anti-Stimulus”
Some of California’s largest and most important corporations are bracing for a larger than normal tax bill due on May 31, 2009. On that day, California companies will pay approximately $1.5 billion more in state taxes than they normally would have. I know what you are thinking, with revenues down and layoffs up for most companies, why are they paying more in taxes, further eroding their ability to keep jobs and sustain their businesses? Because a little-known bill was passed as part of the 2008-2009 budget that says they have to.
SB 1X 28 was a bill that was hastily enacted last year as part of the 2008-2009 state budget. This bill imposes a 20 percent strict liability penalty on large businesses that underpay their taxes for any reason whatsoever and will force businesses to pay a half billion dollars more in estimated taxes they do not owe in order to avoid the penalty. In simple terms, California’s most successful companies are being required to loan the state money at the tip of a spear instead of using that money to invest in jobs or bringing new products to the marketplace. SB 1X 28 was passed before it was in print and without public input or any vetting by a legislative committee. The bill was inaccurately described to lawmakers and the media as a bill to double existing penalties for tax scofflaws.