CFC Supports SB 1086 (Florez) – Corporate Subsidy Transparency
Bill Status: Scheduled to be heard by the Senate Revenue and Taxation Committee on April 14, 2010.
CFC Position: Support
The Consumer Federation of California is pleased to support SB 1086 (Florez). SB 1086 will increase the transparency and accountability of billions of dollars in tax subsidies California grants to corporations every year.
Unfortunately, the budget outlook for this year is not good and California will have to make many more difficult choices. At the same time the state will grant $4.1 billion in corporate tax subsidies in 2010, the largest amount ever, according to the Franchise Tax Board (FTB).
When they were created these subsidies were granted with some specific policy goals in mind. From economic development and job creation, to ensuring California’s research stays on the cutting edge, taxpayers expect a return on their investment. But the current system prevents the public from seeing who is taking the subsidies or how much they get. Essentially Californians have no way of knowing if the recipients of large tax breaks are holding up their end of the bargain.
The solution is to make these tax subsidies open to scrutiny by the public. It is incredibly important, now more than ever, that we know government is spending our tax dollars wisely.
Specifically, SB 1086 will require the FTB to compile and disclose the recipients of corporate tax subsidies above $1,000 and how much they are taking. The information will be posted on the state’s transparency website in a searchable database. In addition to knowing who is getting our money and how much they receive, there will be a short description of the intended purpose of the tax credit.
Because all of this information is already collected by the FTB on corporate tax returns there is no added reporting required from California’s corporations. Additionally, the state already has the digital infrastructure to display the information. The FTB need only compile and report the data.
If we are going to seriously talk about how the state should allocate its diminishing resources there should be adequate information about all the places tax dollars are spent. For these reasons we urge support for SB 1086.