(May 30, 2007) The California Chamber of Commerce is supporting legislation to encourage investments in and expansions of California-based operations and jobs, including those in highly coveted industries such as high technology, biotechnology and biopharmaceutical.

AB 1591 (Ma; D-San Francisco) will provide an alternative tax apportionment formula for companies that demonstrate a measurable commitment to maintaining a presence and creating jobs in California.

The bill addresses a significant problem with the current apportionment formula — the method the state uses for determining the portion of taxes a multistate or multi-national company owes California. The current formula results in a greater tax burden on companies that have operations and jobs within California rather than just sales. The more operations and jobs the company has within California relative to its sales, the higher its tax burden.

California’s tax structure should not penalize industries that commit operations and jobs to the state and accordingly infuse significant revenues into the state’s economic vitality.

AB 1591 reduces the current penalty effect of California’s apportionment formula. It also would place California in a better competitive position with other states that already have taken aggressive steps to adopt an apportionment formula more inviting to operations and jobs than California’s.

The CalChamber supports changes to the apportionment formula that encourage retention and growth in investment, jobs and operations within the state’s borders.

Any such changes, however, should not result in a penalty or increase in tax liability for other industries or companies.

AB 1591 upholds and advances these sound public policy principles.

Action Needed

AB 1591 awaits a hearing date in the Assembly Revenue and Taxation Committee.

Contact your legislators and members of the committee and encourage them to support AB 1591.

Staff Contact: Kyla Christoffersen