Overview
Last October, the California Legislature passed the 2010–11 budget a record 100 days late, but within a matter of weeks, the annual forecast put out by the Legislative Analyst’s Office (LAO) suggested it was already $6.1 billion out of balance, and predicted lawmakers would need to address a total deficit of $25.4 billion by the time they enact a budget for 2011–12. Taxation/Budget 
Goals
- Monitor legislation and regulatory activity to ensure that California tax laws are fair and can be administered easily.
- Review state spending plans to make certain that economy and efficiency are the primary goals of government.
Major Victories
Stopping Hidden Taxes. Sponsored the winning campaign for Proposition 26, clearly defining fees and taxes at the state and local levels so that governments can’t pass real taxes with a simple majority vote.
Stopping Multiple Tax Proposals
- Blocking new barriers to economic development in 2010, such as tax hikes on companies that invest in property and jobs (AB 1935, SBX6 18), targeted tax increases (AB 2100, SB 1210, ACA 22), and proposals creating uncertainty about the future availability of investment-encouraging tax credits (AB 2171, AB 2641, ACA 6, SB 1272, SB 1391, SBX6 20).
- Aggressive campaigning and advocacy by CalChamber-led coalitions in 2009 dampened enthusiasm for tax increases and new taxes, including targeted tax increases that would have exacerbated state budget problems and hurt the targeted industries; a “split roll” proposal to tax business properties at a higher rate; an energy tax that raises the price of gasoline and California-produced crude oil; and an onerous new requirement for business and government to withhold taxes on payments to independent contractors.
- Block legislation levying a climate change tax increase in 2009 (AB 231, AB 1405, SB 31)
Improving Tax Process
- Supported proposal in 2010, reducing complexity and waste in tax reporting and administration by conforming many California tax provisions to recent changes in federal tax law, including a conformity provision giving financial relief to troubled borrowers by excluding debt forgiven by a lender from a borrower’s taxable income (SB 401).
- Backed urgency legislation in 2009 improving taxpayer confidentiality (AB 192), reducing administrative delays in the reassessment process (SB 816) and simplifying sales tax compliance for non-profits (AB 1486).
Promoting E-Commerce
- Stalled proposals in 2009 harming California online marketplaces, web-service providers, and websites of small businesses and non-profits by changing California’s sales tax law in a way that will encourage out-of-state retailers to instead do business with out-of-state counterparts (AB 178, ABX3 27).
Position
The CalChamber supports sound tax policies that foster investment and respect the proper balance between the need to sustain necessary government programs and the need to maintain and grow a strong economy.
Issue Summaries
Enterprise Zones
Position: The CalChamber opposes any attempt to undermine or reduce the EZ program, and supports appropriate changes to improve or strengthen the economic development incentives offered under the EZ program. Enterprise Zones
Federal 1099 Reporting
Position: The CalChamber believes Congress can find better alternatives to help cover the costs of the new health care law than burdening businesses that already are struggling in this economy. The CalChamber will continue to support efforts to repeal the new 1099 reporting requirement. Federal 1099 Reporting
Tax Reform
Position: Although the CalChamber is not opposed to evaluating tax reform ideas that would simplify the system for taxpayers and create consistent revenue, the CalChamber does not believe this should be the only focal point for trying to solve California’s financial problems. Tax Reform
Use Tax Enforcement
Position: As an alternative, the CalChamber does not oppose approaches that focus on enforcement of the individual obligation to report use taxes to the state, such as the use tax registration requirement for businesses passed in 2009, which the Board of Equalization expects to raise approximately $600 million annually by 2013. The CalChamber also encouraged legislators to reinstate the use tax reporting line on the personal income tax form, which was eliminated in 2009, but was reinstated permanently in 2010. The CalChamber is supportive of proposals to make the reporting line mandatory, while supplying individuals with an estimate table and a safe-harbor to encourage and simplify compliance. Such a proposal was vetoed in 2009, but might be revived with more success in 2011, given the change in leadership. The CalChamber also believes more can be done to educate individuals about their obligation to remit this tax. Use Tax Enforcement
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