Prop 24 causes debate
Posted October 28, 2010 at 11:12 pm in News
USC College Democrats and Republicans said they hold opposing viewpoints for Proposition 24, which aims to repeal $1.7 billion in tax breaks that corporations would receive, starting in January 2011.
The tax break legislature that was approved in 2009 â which would be repealed by Prop 24 â is split into three main components; the single sales factor, the ability to carry back losses and tax credit sharing.
The single sales factor will allow corporations to pick which category â from sales, payroll or property â that they will be taxed on rather than being taxed on all three. Corporations that are struggling will be able to receive refunds for taxes paid in the last two years, and tax credit sharing would allow corporations to spread their tax credits among their affiliated businesses.
USC College Democrats said they would endorse Proposition 24, Repeal of Corporate Tax Breaks.
âThis is a no-brainer; corporate tax loopholes are not helping the economy; the money should be going to education. Proposition 24 allows this money to go where it belongs,â said Micah Scheindlin, political director of the USC College Democrats.
USC College Republicans President Katherine Cook said the group is urging voters to vote no on Proposition 24 because the existing law attracts new business to California, which helps create jobs.
âThis legislation makes it easier for businesses to stay afloat, for Californians to start their own new businesses, and keeps existing businesses in California,â Cook said. She also emphasized the importance of keeping and creating new jobs, citing Californiaâs current 12.4 percent unemployment rate.
Voting yes on this proposition would repeal all aspects of the above legislature, while voting no would enable it to continue without any changes.
âThe state government estimates that if [the legislation] went into effect, the short run cost would be $700 million in reduced tax collections. However, in the long run, it would attract more businesses to California, creating more jobs and expanding the tax base,â said Charles Swenson, professor at the Marshall School of Business, who is also an expert on taxation policy and economics.
According to a Public Policy Institute of California statewide survey, there is no firm majority hold on the issue at present, with 31 percent of voters in favor of the proposition, 38 percent against and 31 percent undecided.
Julius Cotton, a senior majoring in business administration, said he already voted in favor of the proposition because if passed, the new law would redirect capital to citizens in California.
âThe tax breaks are just corporations buying their way out of trouble at the expense of citizens,â Cotton said.
âI would vote to give corporations a break as an incentive to finally do something useful,â said Samantha Ma, a junior majoring in biomedical engineering.
Proposition 24 holds a lot of weight with both California businesses and citizens alike who are ultimately hoping to bring the state out of its dire financial situation. If the proposition passes, corporations estimate between 146,000 and 322,000 lost jobs, according to an economic analysis by Claremont McKenna College.
âThis is a really technical issue which is best handled by the legislature. Voters should not be forced to try to understand this,â Swenson said.