California and Proposition 39

California has a long history in looking after the environment and taking clean energy seriously, with renewable industries such as solar, geothermal and hydroelectric comprising roughly 20% of energy usage, with current targets pushing towards 33%. In terms of education the state is respectable, placed in the middle of national tables, though current reporting shows that improvements can be made in teacher preparation and effectiveness. There is a business market with stable industry foundations such as agriculture and electronics, and a diverse fledgling business market supported by government initiatives such as the California Green Business Program. However, since the economic crisis, California has faced economic problems like every other state, but it is coming to light that other states are rebounding more successfully.

No matter what developments in education, business and clean energy are present in California, and no matter what improvements should be made, there is an initiative in action which will help to financially support these three sectors in a time when financial support is needed more than ever, and to help increase competitive advantage and overall form a real contribution to the state’s GDP, and that initiative is Proposition 39.

Proposition 39

Proposition 39California has a strong and progressive job market, and a forward-thinking economy that is generating new jobs in future industries, but a current loophole in the tax system is having a negative effect on the economy. For companies operating nationally, corporate income is taxed by the states in which business is conducted, and the amount that a company is taxed will depend on the amount of sales made within the state, and what property and employees are within the state.

Some states have recently introduced the ‘single sales factor’ which acts as an incentive for companies to build property and generate new jobs in-state, but just when California was about to switch to this new system, a loophole was created that allows companies to go with either the old or the new factor, whichever is cheaper for them. This loophole means if a corporation has less employees and other investment criteria in a state, then they pay less tax, eliminating the incentive that the single sales factor was supposed to provide and causing companies to create new jobs outside of California.

Proposition 39 is an initiative which, if passed, will close this loophole. Corporations will pay their full share based on sales made in-state only, and $1 billion will be added to California’s economy each year. The funds raised will be used to directly finance clean energy and energy efficiency projects, alongside millions of dollars of funding for California’s education system. This will lower the state’s carbon emissions, generate new jobs directly and indirectly (through the attraction of new business into the state), and improve and develop education facilities.

California leads the US for its progressive clean energy economy, a strong job market and education system. Voting yes on proposition 39 will support and improve upon these three factors and give the state better competitive advantage.

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