California Governor Jerry Brown proposed a new tax plan to the state legislature Thursday that would boost levies on large corporations located outside of California. Brown’s request to state lawmakers is to revert the sales tax structure back to the formula adopted before 2009, which would require multi-state corporations, which employ few California workers, to pay higher sales taxes for goods they sell within state boundaries.
These dollars would shift to California companies in the form of sales-tax exemptions, with the intent to nudge companies to manufacture products and hire people within the state.
Under the 2009 budget plan, out-of-state companies were allowed to choose between two tax formulas, which the Brown administration claims left California-based businesses at a competitive disadvantage. The new plan would calculate out-of-state companies’ tax liability solely on the portion of sales they earn in California, an approach called the "single-sales factor."
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