While it seems to be an American pastime to complain about filing taxes, it’s an important day to reflect on what taxes represent and what tax revenues make possible. Taxes are a shared commitment to community and well-being — they are how we take care of one another and build toward a better future.
State tax revenues make possible the public investments needed to improve the lives of all Californians, from making sure people can access health care to supporting affordable housing and solutions to homelessness to allowing parents to go to work knowing that their children are safe and cared for — and much more.
We have seen how public investments have meaningfully improved the lives of Californians, but more needs to be done — especially now that the federal government has enacted the largest cuts to health care and food assistance in US history and shows no signs of stopping.
Fulfilling the promise of a California where everyone can get ahead will require the state to generate significant ongoing revenues to protect and continue the progress toward ensuring that all Californians — no matter their job, race, or zip code — can put enough food on the table in a safe and affordable home, go to the doctor when they need to, and have their children learn and play in a safe environment while they go to work or school.
Families of all income levels pay taxes to support public services, not just when they file income taxes or have money withheld from their paychecks, but also when they make purchases and own properties.
Just as individuals and families contribute, corporations also have a responsibility to pay taxes to support the public services that provide them with a skilled workforce, infrastructure to allow them to sell and deliver goods and services, and a customer base that can afford their products after meeting their basic needs.
Some corporations, however, can avoid paying much in corporate taxes to California, due to various state tax breaks. Let that sink in: nearly half of profitable corporations in California pay no taxes on their profits beyond an $800 minimum tax.
And some large global corporations can avoid California taxes by using the state’s “water’s edge” election to make it appear that they have no profits in California at all.
State leaders have common sense solutions to ensure highly profitable corporations are fairly contributing taxes to support the public services needed so that all Californians can make ends meet and get ahead. Here’s what that could look like:
- Eliminating the water’s edge election that allows global corporations to avoid $3 to $4 billion in California taxes by stashing profits in offshore tax havens.
- Placing ongoing limits on the amounts of tax credits and net operating losses that corporations can use each year to reduce their California taxes.
- Requiring the most profitable corporations to contribute a higher share of their profits in state taxes, similar to what we ask of individuals with higher incomes.
