Walters: Could taxing multinational corporations erase California's budget deficits? Not likely

"The state budget's chronic gaps between income and outgo $125 billion over the last few years, according to the Legislature's fiscal advisor have left Gov. Gavin Newsom and legislators scrambling for ways to clean up the state's finances. Newsom has so far shunned new taxes to close the gap, even trying to sidetrack a tax on the assets of billionaires that may appear on the November ballot."

"Union advocates say it would generate about $25 billion a year for four years, roughly the size of California's projected deficits, with proceeds going mainly to health care. While Newsom may not want to raise taxes as he gears up for a presidential campaign, his fellow Democrats in the Legislature and the myriad interest groups to which they owe allegiance increasingly see tax hikes as the only way out of the twin dilemmas of budget deficits and recent cutbacks in federal aid."

"For many decades, California levied those taxes on what was called a unitary basis. Corporations had to report their global incomes and a formula determined what percentage would be taxed by California. The system was very controversial and bitterly opposed by foreign-based companies, especially those based in Japan and Great Britain. Their governments pressed California, directly and through diplomatic channels, to do away with the system."

California has experienced chronic budget shortfalls totaling about $125 billion over recent years, forcing state leaders to seek revenue solutions. Governor Gavin Newsom has resisted new taxes and attempted to block a proposed billionaire asset tax that union advocates say would raise roughly $25 billion annually for four years, mainly for health care. Legislative Democrats and allied interest groups increasingly favor tax increases amid deficit pressures and cuts in federal aid. Lawmakers are examining corporate taxation, revisiting the historical shift from a unitary worldwide tax approach to a water's-edge option that critics say enables profit shifting.

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