Other Views: State should put the brakes on tax breaks

Maybe corporations are people, as Republican presidential candidate Mitt Romney has said. But if they are, some of them seem to be making out like bandits when it comes to paying California state taxes.

As The Bee's Kevin Yamamura reported last Sunday, the state's collection of corporate taxes is running 10 percent below Department of Finance projections, while income taxes that actual individuals pay are significantly above projections.

At the same time, California's unemployment rate remains stubbornly high, while production rises. In effect, Californians who have jobs are working harder to hang onto their paychecks, and are forking over a larger share of their earnings to the state, while some employers are limiting their tax bite.

That's what lobbyists are for. Corporate lobbyists helped shape budget deals reached behind closed doors when Arnold Schwarzenegger was governor in 2008 and 2009. Those deals helped relieve corporations of having to pay some of their taxes in 2010 and 2011, and beyond.

Exactly how much money those deals cost the state — and save corporations — won't become public for some time. But we are getting a clue, thanks to Yamamura's reporting.

California received $708 million less in corporate taxes in the first seven months of the year than had been expected.

Viewed from a different perspective, corporations' taxes have inched up 2.6 percent so far this year over 2010, while personal income tax payments have shot up by more than 15 percent above projections, or more than $4 billion so far this year.

This comes as corporate profits are up, way up, particularly in the technology sector, which lobbied hard for many of the tax breaks approved in past years.

Iconic Silicon Valley companies Google and Apple have reported that their profits are up 36 percent and 125 percent, respectively.

San Ramon-based Chevron, the nation's second-largest oil company, reported a 43 percent increase in profits in its most recent filing. San Francisco-based banking giant Wells Fargo reported an increase of almost 30 percent.

It's not publicly known whether any of these companies directly benefited from the recent state tax breaks. Information about specific taxpayers is not public. But the trend is clear.

The nonprofit California Budget Project reported last year that corporate taxes account for less than 11 percent of general tax revenue. That's down from 15.4 percent in 1978, when Jerry Brown was governor the first time. Conversely, personal income taxes accounted for 37 percent of the general fund then and more than 51 percent now.

These numbers show that California's tax system is seriously out of whack, something that lawmakers and interest groups should consider in planning tax-reform legislation and initiatives for the 2012 ballot.

The tax burden has shifted to benefit corporate "people" to the detriment of real people. That must stop. If lobbyists for corporate "people" were wise, they'd engage in serious talks about restoring some fairness to the tax system.

Otherwise, real people might decide to exercise their right to vote in ways corporations might not like.