We’ve previously documented the fact that a few, very large corporations will receive most of the benefits from the three “dark of night” tax breaks passed as part of the September 2008 and February 2009 budget agreements. New data from the Franchise Tax Board confirms a hunch that we had based on our initial review of the data: some very large and very profitable corporations will benefit from more than one of the recent tax breaks.
In fact, once the three tax breaks are fully implemented, about one-third of the cost – $420 million – will be attributable to 210 “double-dippers” – corporations that will benefit from both elective single sales factor apportionment and the ability to share tax credits among members of a “combined reporting group” – a group of commonly controlled corporations. Within this group:
- 10 corporations will receive combined tax breaks in excess of $20 million each per year, with an average tax cut of $24.7 million per year.
- 95 percent of the benefits of double-dipping ($399 million) will go to 79 corporations with annual gross receipts in excess of $1 billion. These extraordinarily large corporations will receive average annual tax cuts of $5.1 million.
- While about half (54 percent) of the benefits of double-dipping will go to 145 manufacturing firms, 17 retail and wholesale trade corporations will see their tax bills reduced by an average of $1.5 million each per year and 21 information technology corporations will receive annual tax cuts averaging $7.6 million.
To put these amounts in context, the $420 million in tax cuts going to double dippers is slightly more than the combined savings that would be generated by the Governor’s May Revision proposals to reduce CalWORKs’ cash assistance payments by 15.7 percent, reduce SSI/SSP payments, and scale back benefits and increase families’ cost for children’s health coverage in the Healthy Families program. Alternatively, $420 million translates into about $71 for each of the 5.9 million students in California’s public schools.