http://www.sacbee.com/2011/08/24/3860066/brown-to-propose-new-corporate.html
Gov. Jerry Brown will ask lawmakers Thursday to tighten a corporate tax formula in exchange for giving manufacturers a sales tax exemption and offering enhanced jobs tax credits, according to legislative sources.
To enact the plan, the Democratic governor must win votes from at least two Republicans in each house, which Brown failed to do in his state budget fight earlier this year. Brown will portray his plan, which would start in 2012, as a job creation package as California grapples with a 12 percent unemployment rate.
The linchpin is a requirement that multi-state companies calculate their corporate tax liability only on the proportion of sales they have in California relative to elsewhere in the nation, a method called "single sales factor."
Under a 2009 budget deal, firms won the ability to pick the more generous of two tax formulas starting this tax year, making California one of only two states to give companies that choice on an annual basis.
Brown wanted a mandatory single sales factor in January to raise nearly $1 billion for the state budget, but Republicans and business groups blocked that plan. Proponents say that making that formula mandatory would benefit companies that build facilities and create jobs in California. But it would force some major firms to pay more taxes and has divided the membership of leading business groups.
Rather than use the money to attack the deficit, the governor now wants to direct it toward a nearly 4 percent state sales tax exemption for manufacturing start-up companies and a 3 percent state sales tax exemption for existing firms, legislative sources said. The exemption would also apply to the biotechnology, software and clean energy industries.
Brown also wants to enhance employer tax credits by expanding the amount from $3,000 to $4,000 per worker and providing it to businesses with up to 50 employees, rather than 20.
The latest Brown proposal builds on Senate Bill 116 by Sen. Kevin de León, D-Los Angeles. SB 116 is on the Senate floor and has yet to be heard in the Assembly. The California Chamber of Commerce, California Taxpayers Association and California Manufacturers and Technology Association oppose the bill, according to a Senate analysis.
Brown called a Capitol press conference for Thursday morning, his first in nearly two months since reaching a tentative budget deal with Democrats. The governor has faced mounting criticism for ignoring job creation while other state leaders, most notably Lt. Gov. Gavin Newsom, have announced their own ideas.
"Promoting job creation in California should be a top priority for all legislators," said Brown spokesman Gil Duran in an e-mail. "We are hopeful that there will be bipartisan support for job creation in California."
