A measure repealing state tax breaks for business has qualified for the November ballot, Secretary of State Debra Bowen announced late Thursday.
The measure, backed by the California Teachers Association, repeals three major tax breaks the Legislature granted businesses last year as part of budget negotiations. The tax breaks, valued at about $2 billion a year, were approved with the hope of boosting business investment in the state.
The tax breaks give businesses the ability to carry forward losses and share tax breaks with affiliates. Also, businesses with operations in multiple states would be able to pay taxes based on their sales in the state instead of a combination of property and sales taxes.
Soon after the tax breaks were approved and signed into law by Gov. Arnold Schwarzenegger in early 2009, labor unions and other interests labeled them as “corporate giveaways” and launched a campaign to repeal the breaks. They said the tax breaks deprive the state’s general fund of money that could be used to offset major budget cuts in education, health care and social services.
With financial backing from the teachers association, supporters submitted more than 800,000 signatures, well above the 434,000 needed to qualify for the November ballot.
Business groups are vowing to fight the initiative, saying that if it passed, it would be more difficult for the state to attract new business operations and would force businesses struggling with losses to lay off more employees. They have formed a coalition called “Stop the Jobs Tax Initiative.”
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