Tuesday, September 6, 2011
Gov. Jerry Brown said Tuesday that he was optimistic that lawmakers will agree this week to end a tax break for companies based outside the state, signaling he was willing to modify his proposal in an effort to stop what he called a "toxic loophole."
The Democratic governor said some Republican lawmakers already support the plan and that they were working to persuade others in the party.
"I don't want to count the chickens before they're hatched, but there is a lot of cackling going on, so that bodes well," Brown told employees at the San Diego headquarters of Gen-Probe Inc., a medical diagnostics maker that says it would save $4 million a year under his plan.
The governor is asking lawmakers to change a tax formula passed in 2009 that benefited large, out-of-state corporations. He wants companies to pay taxes based solely on sales of their goods and services.
Currently, they can choose to pay taxes based partly on how many employees and how much property they have in California.
"It's toxic because it rewards companies for creating jobs not in California but somewhere else," Brown said.
Brown faces a tight deadline, with lawmakers going on recess Friday until January. He said he was entertaining proposals from Republican lawmakers in an effort to pick up votes.
"I assume Republicans are going to want to create as many jobs as they can, so whatever they come up with, I'm sure it'll be good," he said.
GOP leaders criticized the proposal when Brown unveiled it last week, casting it as a business tax increase. They said the Legislature should focus on reducing regulations and frivolous lawsuits, as well as lowering public pension burden on taxpayers.
"It still appears to be an attack on one set of job creators to benefit a different set of job creators, and that simply doesn't make sense," Senate Minority Leader Bob Dutton, R-Rancho Cucamonga, said. "If the governor is serious about retaining and creating California jobs, he will veto the onslaught of job-killer bills that legislative Democrats are passing these last few days of session."
Assembly Minority Leader Connie Conway, R-Tulare, renewed her criticism Tuesday, saying the plan amounted to a tax increase amid an economic decline.
Brown spent months earlier this year seeking GOP support for his budget and failed to garner a single vote.
About 900 of Gen-Probe's 1,400 employees work in California and 85 percent of its property is in the state. The company's chief executive, Joe Hull, threw his support behind Brown's plan to an audience that included other leaders of San Diego's biotechnology industry.
"If it does happen, it will be a very good example of how the two parties can actually work together in the face of the sorry spectacle that we see in most parts of this country between the two parties," Brown said.
Associated Press writer Juliet Williams in Sacramento, Calif., contributed to this report.