Business tax receipts are falling at the same time hefty profits are being posted by major companies across the country.
At $8 billion this year, the taxes collected from most of California’s major businesses are $4.4 billion less than what they were in the fiscal year that ended June 30, 2005.
Perhaps the chief culprit in tamping down business tax collections was allowing corporations in the 2012 and 2011 tax years to choose the most generous formula for themselves in determining how much they owed in California taxes.
“It’s getting increasingly difficult to forecast the corporate tax given all of the tax policy changes that have been made over the past decade,” said Michael Cohen, Brown’s finance director, in unveiling the Democratic governor’s new spending blueprint on January 9.
Says the legislative analyst: “In the near term, it is easy to imagine actual annual revenues for this tax being hundreds of millions of dollars higher or lower than our forecast in any given year.”