Patt Morrison for October 6, 2010

Fuzzy math in California’s budget deal: $19 billion deficit, $315 million corporate tax break???

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Budget

With details still hard to come by in California’s budget agreement, there were some revelations that are sure to drive people crazy: in a time of perpetual multi-billion-dollar deficits, when public employees are being laid off and social services are being slashed and burned, a few corporations based in California are due to receive major tax exemptions as part of the budget deal. Humboldt Redwood Co., a lumber company, is the recipient of a very sweet deal that will allow them to deduct $315 million in taxes that were due to the state government as part of a 2008 acquisition; the California Cable Technology Association won a beneficial change in the tax liability formulas, which will cost the state $28 million this year, $95 million next year and $100 million annually thereafter. The deals on tax breaks were key in winning Republican support for a state budget that seeks to close a gaping $19 billion deficit, but they certainly seem to run counter to the need of the state to collect more revenues.

Guest:

Jack Dolan, staff writer for the Los Angeles Times, based in Sacramento


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