California should create incentives for companies to create jobs in our state rather give breaks to companies that would rather boost employment elsewhere. That is what is happening today, and to correct it, we should vote yes on Proposition 39.
In 2008, the legislature and Governor Schwarzenegger granted a billion-dollar tax credit to companies that have their headquarters and the majority of their employees outside California, but sell in the state. This gave these companies the privilege of choosing between two tax systems to be able to pay the least amount of taxes.
This makes no sense, especially given California’s fiscal difficulties. Incentives should be given to those who create jobs in our state rather than contributing precisely to doing the contrary.
We think the legislature is the right place to set tax policy, but in this case, attempts at correcting this problem have fallen short in Sacramento. It was always impossible to get past the hurdle of the two-thirds majority in the legislature for tax laws.
Proposition 39 has arisen as a way for voters to do what the lawmakers could not: close this tax loophole.
It is unfortunate that, like any ballot initiative, Proposition 39 also aims to seize the occasion to promote another agenda. In this case, the initiative specifies that $500 to $550 million per year-for a period of five years-obtained through this tax change must be devoted to energy-efficiency programs.
We would prefer to see this money go to the general fund. We believe that there are many other pressing priorities in a budget where the social safety net has been decimated. Nonetheless, the possibility that after five years all the money would go to the general fund is better than no change at all.
This initiative sensibly corrects a tax aberration that benefits companies that prefer to create jobs out of state rather than in California. At the same time, it collects much-needed funds for the state coffers. Vote yes on Proposition 39.