Sen. Skinner’s Corporate Disclosure Act, SB 972, OK’d by Senate Committee

The Corporate Disclosure Act, SB 972, by Sen. Nancy Skinner, D-Berkeley, won approval today from the Senate Governance and Finance Committee. SB 972 would, for the first time, allow public access to specific tax information on the largest corporations doing business in California. SB 972 directs California’s Franchise Tax Board to annually collect and post on a publicly available website the total dollar value of state tax benefits those corporations with gross receipts of $5 billion and higher have claimed and total amount in state taxes the corporation has paid.  

“Californians deserve to know how much — or how little — large corporations pay in state taxes, and they deserve to know much big businesses pocket in state tax credits,” Sen. Skinner said. “As stewards of California’s budget, legislators also need this vital information. Transparency is essential to ensure that we’re using public dollars effectively, especially with California facing a $54.3 billion budget deficit and the prospect of devastating cuts to essential services.”

Tax credits, exemptions, incentives, and deductions — which are actually tax expenditures — can be valuable tools for a state to attract new business, create jobs, or meet other policy objectives. However, current California law allows companies to keep secret the tax credits, exemptions, and deductions they receive, making it impossible for the public and policymakers to understand whether the tax investments that the state makes to attract and support these businesses is actually paying off.

Through these tax credits, California forgoes the collection of billions of dollars in tax revenue each year. In April 2016, the California State Auditor found that in 2012-13 alone, corporations received roughly $5 billion in tax breaks from the state.

Meanwhile, corporate income tax revenue to the state has been steadily declining for years. In the 1970s, corporate income tax revenue made up more than 15% of California’s general fund revenue. Today, it makes up less than 9%. Meanwhile, the 2017 federal tax cut allowed corporations that do business in California to keep an extra $13 billion to $17 billion annually.

Under SB 972, corporations that do business in California and have gross receipts of $5 billion or more would submit tax information on their state tax liability and the total amount of state tax credits they claimed. This information would then be posted on a publicly accessible website by the state Controller’s Office.

“This state has created golden opportunities for companies to grow and thrive, and taxpayers should know whether those same corporations are paying their freight. That’s why we are sponsoring SB 972 to create greater accountability and transparency for corporate taxes and tax expenditures in California,” said Terry Brennand of SEIU California.

SB 972 now goes to the Senate Appropriations Committee for consideration.

Sen. Nancy Skinner represents the 9th Senate District and is the Senate majority whip.