By Frank Wells
CTA Board member Eric Heins tells legislators during a September legislative hearing on CTA-backed Proposition 24 that by closing newly opened corporate loopholes, the measure will restore more than a billion dollars to the state’s general fund.
Proposition 24, the Tax Fairness Act, would protect California jobs, according to a study released last month. The study, “Corporate Taxes and California’s Economic Growth” by Dr. Peter Fisher of the University of Iowa, concludes that windfall tax breaks given to large corporations during the 2008 and 2009 state budget negotiations could result in the loss of up to 25,000 public sector jobs without a guarantee to create a single new job in California. Proposition 24 would repeal those breaks.
At the same time that state services were being slashed and thousands of educators were being laid off, lawmakers made backroom deals away from public scrutiny that added over a billion dollars to the deficit in each of the coming years. The tax giveaway was made for California’s largest corporations with no requirement or expectation that they would use that money to create or maintain jobs in the state.
In fact, the opposite has happened, and it is worthwhile to look at the behavior of the largest donors to the No on 24 campaign. The big corporations that are paying to defeat Proposition 24 are also paying their CEOs over $8.5 billion. They collectively made over $65 billion in profits last year. At the same time, they laid off more than 100,000 workers.
These large corporations are laying off thousands of workers despite the fact that they are awash in cash and making huge profits. Yet corporate greed has led them to make outlandish claims of additional job loss as they try to avoid paying their fair share. With no evidence to support their claim, opponents of Prop. 24 falsely stated its passage could lead to up to 644,000 state job losses. Dr. Fisher’s study calls those claims “outlandish.”
Especially galling is that while these wealthy companies were enjoying this huge giveaway, average Californians were tightening their belts as their taxes increased. Sales taxes, income taxes, and various state fees all went up in an effort to help close the budget gap and prevent even deeper cuts to schools and other services. While Wall Street got another government handout, schools and students suffered as Main Street worked to make up the difference.
In response, CTA wrote and placed on the ballot Proposition 24. “This is a matter of fairness and a matter of what’s best for our schools and for our state,” says CTA President David A. Sanchez. “There was no logical reason to give our largest corporations breaks they obviously don’t need, breaks that would drive our state even deeper in the hole. California simply can’t afford this.”
Fisher’s study points out what should be obvious: The loss of over a billion dollars to state coffers annually will result in more cuts to schools and services, and even more unemployment. A key conclusion of the study is that these tax giveaways will cost 25,000 teachers, firefighters, nurses and others their jobs immediately due to additional state budget cuts
A balanced analysis by the California Budget Project makes similar points and concludes: “The fundamental policy choice raised by Proposition 24 is whether the state should continue to provide three large tax breaks to businesses at a time when budget shortfalls are projected for the foreseeable future. Voters should consider how the state could best use the resources in question — approximately $1.3 billion at implementation — to promote the economic well-being of all Californians.”
Proposition 24 is one of CTA’s top priorities in this election. Its passage will help protect education funding, save jobs, and make sure everyone, including our wealthiest corporations, pays their fair share during this economic crisis. Tax breaks to highly profitable corporations that continue to lay off workers will not help California.
To see Dr. Fisher’s full report visit www.yesprop24.org.
A yes vote on Prop. 24:
- Makes big corporations pay their fair share without raising taxes. Voting YES on Prop. 24 keeps taxes for corporations at their current levels.
- Repeals a shady backroom deal between Sacramento politicians and big corporate lobbyists.
- Prevents more than a billion dollars in additional funding cuts for public schools, public safety and health care.
- Saves jobs of more than 25,000 teachers, police officers, firefighters, nurses and paramedics across the state.