Now Dan Morain, Senior editor of the Sacramento Bee, is reporting that Comcast is the latest to play “take our tax breaks and run.”
Now we find out that Comcast is laying off at least 212 workers at the start of 2011 and moving at least 150 jobs to Utah.
Voters on Election Day voted to defeat Proposition 24 that would have repealed roughly $1.5 billion in corporate tax breaks.
“Swiss pharmaceutical giant Roche, through its California subsidiary, Genentech, was the largest donor to the campaign to kill the initiative, Proposition 24, essentially acknowledging that Roche will benefit mightily from the 2009 deal” writes Mr. Morain. “With its California tax break secure, Roche last week issued an announcement from its headquarters in Basel, Switzerland, saying it would be implementing its “Operational Excellence Program.””
As Mr. Moraine put it, “What interesting timing. No political consultant would have ever advised that Roche announce lay-offs in the days leading up to the Nov. 2 vote on Proposition 24.”
Likewise, Comcast also played the sophistication game. “Sophisticated political player that it is, Comcast surely would not have announced that it was shipping jobs to Utah if the California tax legislation had been pending,” Mr. Morain continued.
Mr. Morain writes, “Comcast is not the only beneficiary of legislation. It applies to other out-of-state companies such as Microsoft that sell so-called “intangible” goods into the state, including cable or software licensing agreements. California authorities estimate the provision will save such companies $100 million a year.”
However, our own Senator Lois Wolk is calling this the “Comcast provision.”
“If we’re going to be granting tax earmarks, we must demand specific performance,” said Senator Wolk who comes out of this looking very good, as she was one of the few who dissented when the Legislature approved last month’s tax deal.
Writes Mr. Morain, “In her view, a company receiving a tax benefit ought to commit to hiring California workers. The state should be able to claw back breaks given to a company ‘that takes our money and flees our state.’ “
Of course, in reality that is not how tax deals work in the Capitol, Dan Morain is quick to add.
But perhaps the real problem is that we are missing the big picture here, as companies flee California despite being handed huge tax breaks. Lawmakers are willing to give up the store with these tax breaks, during a time when our state coffers are hurting, in the fleeting hope that somehow companies will stick around and add jobs.
Perhaps we need to change the way we give these tax breaks, and we can make them conditional upon companies bringing jobs in and not exporting jobs out of California.
It is difficult during tough economic times to promote business, but giving tax breaks and have companies still pull out is completely unacceptable from a public policy standpoint. The fact that these companies knew enough to wait until just after the election and just after the budget was passed demonstrates they were fully aware of the stakes.
Unfortunately, our leaders have been snookered again.
“More often, lobbyists and the business interests they represent tell legislators that they must cut taxes, or else the businesses will head to some other state or foreign land,” Dan Morain wrote. “Legislators often agree and in the process twist themselves and the tax code into knots – as happened when they approved the 2009 corporate tax-break legislation.”
“Politicians hope that by tweaking the tax code they can help businesses, and that businesses will hire more workers. No doubt, that’s true some of the time,” he writes. “But businesses hire and fire for many reasons, most of them way beyond the control of California’s Assembly and Senate.”
He concludes, “When a corporation gets a tax break one month and announces that it’s moving jobs to Utah the next, California lawmakers end up looking like chumps.”
Worse than that, they look like politicians who sold out to big business while harming those who rely on services such as education, health care and other state and county services that help those in need.
—David M. Greenwald reporting