Economics 2010
California tax laws were finally updated to join the nationwide trend of 23 other states that base the state income taxes of multi-state businesses on their in-state sales, rather than on an outdated formula that also includes payroll and property. But Proposition 24 would repeal that tax update and return California to the outdated formula that taxes job creation, which would cost the state dearly…
New USC Economic Study Quantifies the Cost of Repealing the Single Sales Factor Tax Update
Conducted by Professor Charles Swenson of the University of Southern California’s Marshall School of Business, this recently released study examines the effects of using a single-sales factor in five of the 23 states that already use it. On the Impact of a Single Sales Factor on California Jobs and Economic Growth makes it clear that California would lose 144,000 jobs and long-term revenues if the single sales factor formula is repealed in California as proposed by Proposition 24.
Legislative Analyst’s Office Report Says Old Tax Formula Could Put Some California Producers at Competitive Disadvantage
Among the Legislative Analyst’s Office findings:
“The strongest case for single sales concerns conformity to other states’ policies… Conformity with other states would prevent California firms from being placed at a competitive disadvantage.”
“…the dominant formula now among the large states is single sales: Texas, New York, Virginia, Georgia, Massachusetts, Illinois, Michigan, and Ohio all use single sales while only Florida, New Jersey, and North Carolina still use the traditional or double–weighted formulas.”
“With most states’ formulas now based only on sales, the old formula that used property and payroll could put some California producers at a competitive disadvantage.”
