California lawmakers are moving forward with a plan to publish taxpayer information that is currently a crime to make public.
Lawmakers amended Senate Bill 972, sponsored by Berkeley Democrat Nancy Skinner, Monday. If enacted as is, it would require the state’s controller to publish tax data from any company with at least $5 billion in gross sales minus returns and allowances in the prior year.
It removes language from state law that says unwarranted disclosure of that information amounts to a misdemeanor charge.
Every May 1, the state would publish the “name and tax liability of each taxpayer, the taxable year for which the return is filed, the total gross receipts for that taxable year, and the amount of credits claimed for that taxable year” if they hit the income threshold.
“SB 972 will align California with states like Florida, Indiana, Minnesota, Mississippi, Nebraska, Oklahoma and some seven others that require disclosure by large corporations of the state tax credits taken by those entities and state taxes paid,” Skinner said in a May 28 committee hearing on the bill. “This publicly available information gives the policymakers and the public access to data on their tax policies that allows them to evaluate tax policy.”
The federal government keeps similar data for publicly traded corporations but it is not generally available at the state level. The discussion around the bill focused on the equity of corporate tax credits in a time when the COVID-19 pandemic has ground the state’s economy to a crawl.
“This state has created golden opportunities for companies to grow and thrive, and taxpayers should know whether those same corporations are paying their freight,” Terry Brennand of SEIU California said. “That’s why we are sponsoring SB 972 to create greater accountability and transparency for corporate taxes and tax expenditures in California.”
Opponents of the bill said it was a breach of the California Taxpayers Bill of Rights.
“This bill is an attempt to shame taxpayers who receive business tax credits and, to be frank, we are surprised that this bill has risen to the level of importance for this body to spend time on this debate given all that’s going on in the world,” Dustin Weatherby, Policy and Communications associate with the California Taxpayers Association, said. “By including company names, one can only assume this is being used to shame companies.”
Nikki Dobay, senior tax counsel of the Council On State Taxation, told lawmakers the legislation is not only bad tax policy but could put the state at odds with federal tax provisions.
“We believe this bill violates federal law,” she said, referring to federal protections prohibiting states from disclosing any return or return information. “Because the California Corporate income is based on federal income, I would caution the committee that this very well could violate this provision of federal code which would put at risk the [Franchise Tax Board’s] ability to obtain information from the IRS.”
