The California State Legislature is back in session in Sacramento, and, of course, that is terrible news for business.

The Engineering Contractors’ Association Government Affairs Committee watches with trepidation the machinations of legislators who busily try to pad their résumés with bills that demonstrate their disdain for “corporations,” whom they cast into the role of villain, in their efforts to gain support from like-minded voters for their re-election this November. Classic examples from this year’s new bills hopper are what the state Chamber of Commerce labels “job killer” proposals.

SB 37 (Skinner, D-Berkeley) imposes a tax on California businesses that, for companies with annual net incomes of $10 million or more, would raise California’s corporate tax rate to the highest level of any state in the nation. If approved, this tax boost amounts to an increase of approximately 150 percent, one of the steepest tax increases ever considered in California.

The bill requires that these corporations would see their tax rate shoot up from 10.84 percent to 14.84 percent. It’s even worse for financial institutions whose taxes would go from 12.84 percent to 16.84 percent, based on the compensation ratio of CEOs to employees of the corporation.

SB 37 would further increase the tax rate by another 50 percent from publicly held corporations that have a specified decrease in full-time employees in the United States while increasing the number of contracted and full-time foreign employees.

SB 246 (Wieckowski, D-Fremont) seeks to impose a targeted 10 percent severance tax on oil and gas operators for deposit into the General Fund.

Californians pay the highest consumer prices for gas in the nation, at $3.43 per gallon compared to the national average of $2.58 per gallon. SB 246 would certainly increase consumer prices because the evil oil companies would pass the tax hike along at the pump. But, Cal Chamber wonders why there is a need to raise any taxes at all since the state is running $20+ billion surpluses. There are several reasons. In the case of these tax bills, the authors can point to several shibboleths—reducing income inequality for bankers, forcing corporations to cut back on offshoring of jobs, and, by the twisted logic of Sacramento regulators, higher fuel costs mean reduced demand and thus improved air quality.

There is good news. February 21st was the last day any new legislation could be introduced in this session—unless, of course, there is an emergency—which the Governor or Legislature can declare at any minute.


By Dave Sorem, P.E. ECA Government Affairs Chairman email: [email protected]