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Election 2010: Prop 24 Repeals Corporate Tax Cuts

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(Sacramento, CA)
Thursday, October 28, 2010

Some well-known corporations have donated big bucks to defeat Proposition 24, including General Electric, Cisco Systems and the Walt Disney Company…home to someone who knows a lot about finances and taxes - Scrooge McDuck.

[EXCERPT OF SCROOGE MCDUCK CARTOON up and under] "Money is something you should learn more about. You see the government survives through the taxes we pay... ."

Big companies like Disney don't like Prop 24 because it would undo three tax breaks benefiting multi-state corporations. One of those breaks allows businesses to transfer tax credits among their related companies. Another would allow companies to write-off current losses against profits made in previous tax years.   

These tax changes aren't even that old. They were approved by the state legislature as part of a budget deal back in February of 2009. 

[SOUND OF LEGISLATURE PASSING BUDGET up and under] DINNNNNNNNNGGGGGG - "All members vote who desire to vote, all members vote who desire to vote, all members voter who desire to vote..." 

Governor Arnold Schwarzenegger applauded the tax breaks, which amount to about $1.5 billion a year.

"I want to thank the legislators who voted for this budget. We will focus on creating jobs and boosting our economy by providing incentives to California companies that hire California workers."

But supporters of Prop 24 say California voters should have a say in the matter.

"Gosh, let's at least debate the thing, let's have it in public, let's not do it at the last minute to get a budget signed."

Rob Kerth is president of the North Sacramento Chamber of Commerce. He supports Prop 24 because he says it ensures tax fairness so big corporations play by the same rules as small businesses.

"By allowing them to move their location of taxation around from one year to the next, it allows multi-state corporations exclusively, because a local business can't play in that field at all, it allows them to reduce their tax burden."

But opponents of Prop 24 point out the tax breaks were approved with bi-partisan support.

"The proponents will have you believe that this was some sinister, dark of night deal. But the truth is that these policies have been talked about in Sacramento since the mid '90s."

Tim Valderrama heads an association of high-tech firms called TechNet. He's against Prop 24 because he says the tax breaks are needed to encourage business and create jobs.

"Over 2 million Californians are out of work right now and what they really want is a job. In this time we should be incentivizing job growth and not penalizing it the way that Proposition 24 does."

Prop 24 is supported by the California Teachers Association and the California Labor Federation. Opponents include the California Taxpayers' Association and the California Building Industry Association.

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