Taxpayer Groups Urge Board of Equalization Not to Give $80.6M in Tax Refunds to Companies that Paid No Income Taxes

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“Corporate Welfare Queens” Seek Refunds Barred by State Law

Sacramento, CA — Elected officials on the California Board of Equalization (BOE) are poised to give an estimated $80.6 million in tax refunds to corporations that paid no income taxes, even though California law bars such gifts of public monies, two taxpayer organizations said today. During a press conference this morning, Anita Gore of the BOE disclosed that 19 companies are requesting cash awards of $80.6 million, which is higher than was originally expected.

In a letter, the Foundation for Taxpayer and Consumer Rights and the California Tax Reform Association, non-profit taxpayer advocacy groups, urged Board members to reject the requests and reverse their approval last month of a $5 million handout. Read a copy of the letter.

At today’s hearing, the BOE will consider the applications of eighteen companies for cash refunds under the now-expired Manufacturer’s Investment Credit. The state tax code allowed companies to take a credit against taxes owed; it expressly forbids cash refunds. After the BOE ignored the statute and authorized refunds to several companies in 2003, the Legislature added language to clarify that the statute explicitly prohibited the BOE from granting refunds; it also authorized the BOE to recover previous refunds made in violation of the statute. Now, the companies are arguing that companies that applied for the refunds before the 2003 amendment should be allowed to get them as well.

Among the companies that paid no taxes but are seeking refunds are: LSI Logic, Cypress Semiconductor, Sun Microsystems, Symbol Technologies, Exar, LAM Research, KLA-Tencor, Rockwell Automation, National Semiconductor, Advanced Cardiovascular Systems, Adaptec, Powerwave Technologies, ESS Technology, Beckman Coulter, Hewlett-Packard, Integrated Device Technology, Intel, and Level One Communications

“It is difficult for taxpayers to fathom how their public officials could even contemplate such an action, particularly given the enormous budget deficit our state faces. At a time when Californians are being asked to make deep sacrifices, when the Governor proposes to slash funding for schools, health care and other programs in order to address a mushrooming deficit, Californians cannot afford to bestow upon a few dozen politically connected corporations a multi- million dollar gift of taxpayers’ hard-earned money. The fact that these enormous corporations — some of the largest in California — paid no income taxes for at least one year strongly supports our view that there is no reason for each of you to further coddle California’s corporate welfare queens,” says the letter, signed by Harvey Rosenfield of FTCR and Lenny Goldberg of CTRA.

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Consumer Watchdog
Consumer Watchdog
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