The tax breaks were passed as part of the September and February budget deals. The California Budget Project – a group that advocates for low and middle income residents – analyzed their impact. Jean Ross heads up the group. She says in several years, when they’re fully implemented, the tax changes will cost the state up to two-and-a-half billion dollars a year:
“This is a very significant tax break enacted at a time when the state is facing its most severe budget crisis in history.”
Ross says a very small number of large corporations will benefit most from the tax breaks. They include changes to the way corporations calculate profits and a provision allowing them to transfer tax credits among related companies. Given the state’s 24 billion dollar deficit, Ross is calling for the credits to be rolled back. But GOP lawmakers say California needs more tax breaks. Party leaders are pushing for new credits for businesses to help stimulate the economy.