Should California businesses pay more more in taxes on revenues derived from sales in California than businesses that do not reside in California? I will go out on a limb and say ‘no’.
Why then did California Republicans object to Assembly Bill 1500, a bill that would tax out-of-state businesses at the same rate as California-based businesses? As guide posts, New York and Texas already do this. The savings to out-of-state businesses total $1 billion annually while serving as financial encouragement for California businesses to move out of state. The tax loophole was destructive toward employment in California as it was less costly for businesses to operate in other states and ship their products here.
It is far easier to make an argument that out-of-state businesses should be taxed at a higher rate as they do not employ Californians or pay property taxes. Why give those businesses another advantage over locals, particularly when nearly 20% of all Californians are out of work or searching for full-time work? Unless it is our goal to drive down employment in the state, reduce overall wages and weaken real estate prices, the stance of the minority party made no sense.
If you are opposed to tax hikes no matter the reason, what if I told you that the $1 billion of tax money recovered from these out-of-state businesses would be used to reduce college tuition for California families earning less than $150,000 a year? Few would argue that the typical California family is not struggling under the increased costs of food, fuel and healthcare.
Assembly Speaker John A. Perez packaged AB 1500 with the companion bill AB 1501 that funded tuition assistance with monies from AB 1500. While these bills do not reform problems in the state educational system, the monies help the children of struggling California families to get a higher education. It must be noted that the educational system has suffered from lower funding levels in recent years due in large part to local cities using tax increment on property taxes that was meant for education in order to fund annual operating expenses and bloated redevelopment projects. Cities were raiding the education “bucket” to fund their operating expense “bucket”.
With all of this as the backdrop, it took courage for Assemblyman Brian Nestande, Republican from Palm Desert, to give up his #2 rank as the Republican Caucus Chair to do the right thing for California businesses and families – two groups strongly supporting the bills.
If all of this was not enough of a reason for Nestande to take his principled stand, it was reported by Dan Morain of The Modesto Bee that Nestande may have voted with the Democrats as part of a deal that would make the reform of the California Environmental Quality Act of 1970 (CEQA) a high priority during the Assembly’s next calendar year. It is the objective of Nestande and many others to reform the reckless abuse of CEQA and help remove unreasonable regulatory burdens that weigh on development in California. By Nestande helping Perez pass AB 1500 and 1501, Perez and Governor Jerry Brown would work to reform CEQA which would be a boon to the Coachella Valley as well as development across the State.
Nestande’s vote was about fairness, helping Californians and hopefully encouraging development and construction in the State. These are not a Republican or Democratic issues but Californian issues. We owe Brian Nestande a big ‘thank you’ for setting aside partisan politics and doing the right thing.