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California’s corporate taxes raise revenue that helps pay for the public services and infrastructure that enable businesses to exist and to profit in local communities and statewide. Corporations depend on high-quality schools to produce a dedicated and educated workforce and to help attract qualified employees. Corporations, like individuals, also benefit from a range of public services such as those provided by fire departments and the state judicial system that protect corporations’ legal rights.

California cut the state corporate tax rate twice since the 1980s

Yet, profitable corporations are contributing less in taxes that support these public services, as a share of their California income, than a generation ago. This Issue Brief shows how far corporate taxes have fallen as a share of corporate profits in California, explains several reasons for the decline, and points to inequitable policies that provide larger benefits to corporations that are thriving than to small businesses and Californians who are struggling to live and work in the state. By examining and limiting corporate tax policies that benefit multinational corporations and big businesses, California policymakers have an opportunity to advance a more equitable tax structure, raise revenue for critical services, and achieve a vibrant state and economy that serves more people.

Unlike spending on programs that is deliberated during the annual state budget cycle, policymakers do not scrutinize most tax expenditures each year.

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