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SACRAMENTO, CA — Today, the California Senate is taking steps to ensure that the largest and most profitable corporations that benefit from California’s people, resources, and infrastructure pay their fair share.

The proposed graduated corporate tax rate improves tax fairness, protects small businesses, strengthens refundable tax credits, addresses homelessness and unaffordable housing costs, and supports child care providers.

“The Senate’s plan for a graduated corporate tax will help ensure that large profitable corporations fairly contribute to California’s tax revenues and support the services we all benefit from. This is exactly the kind of policy solution California needs to better support communities across the state,” says Chris Hoene, executive director of the California Budget & Policy Center.

“It’s encouraging to see the Senate prioritize refundable tax credits that we know effectively combat poverty. Tax credits like the CalEITC provide immediate support for families and are linked to long-term benefits for children, including better health outcomes and school achievement,” says Alissa Anderson, senior policy fellow at the California Budget & Policy Center.

Why a graduated tax rate? Today, corporations are generally subject to the same state tax rate of 8.84% regardless of their profitability. This means a corporation with $1 million in profit is expected to pay the same share of its profits in state taxes as a corporation with $1 billion in profit. Graduated rates target the largest and most profitable corporations while protecting small businesses with fewer earnings, similar to the state’s personal income tax, where individuals and families with higher levels of income are subject to higher tax rates.

Without increased revenue streams, policymakers will be unable to make progress for Californians, and inequality will continue to rise. No one should live in poverty in a state as wealthy as California, and the California Senate’s proposal is undoubtedly a step in the right direction.


The California Budget & Policy Center is a nonpartisan research and analysis nonprofit advancing public policies that expand opportunities and promote well-being for all Californians.

Media Contacts

Kyra Moeller
Communications Strategist

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