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Gov. Jerry Brown to propose California corporate tax changes

August 24, 2011 | 11:09 pm

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Gov. Jerry Brown has a new tax proposal to sell the Legislature: raise levies on some large out-of-state corporations in exchange for new sales-tax exemptions for companies who make products and hire people in California.

Under a plan to be unveiled in Sacramento on Thursday, Brown will ask lawmakers to revert state sales tax formulas to the way they were computed before 2009. That would force many large companies that sell their goods in California, but do not employ many Californians, to pay more in sales taxes.

The request was part of Brown's original budget plan that was rejected by lawmakers. What's new is how Brown wants to spend the roughly $1 billion that the tax tweak would generate. Instead of using the money for general state spending, Brown wants to give new tax credits to companies that employ people in California.

Administration officials called the proposal a "revenue neutral" proposal that would allow the state to offer new tax breaks to smaller businesses, but would not directly help the state's general fund. They say the proposal is aimed at rewarding companies that employ people in the state as California wrestles with a 12% unemployment rate.

Brown also wants to expand tax credits for new hires made by small companies in the state. The proposal would require some Republican support in the Legislature -- something Brown has found elusive throughout his young governorship. A Brown spokesman Wednesday said the administration hoped this new proposal would fare better.

"At some point, Republican legislators are going to have to decide whether California jobs are more important than tax breaks for these corporations that send jobs out of state," said Brown spokesman Gil Duran.

Brown is expected to be joined Thursday by representatives from Boeing, electric car maker Tesla and other companies that have manufacturing jobs in California.

Brown's proposal comes less than a week after the state's unemployment rate ballooned back to 12%, the second-highest in the nation behind only Nevada. Earlier this month, Lt. Gov. Gavin Newsom announced his plan to put state workers back to work. Brown has publicly questioned the power of state government to put a dent in the jobless rate, but last week appointed former Bank of America executive Michael E. Rossi as his senior advisor on jobs.

-- Anthony York in Sacramento

Photo: Gov. Brown speaking to reporters in Fresno last week. Credit: Eric Paul Zamora, Fresno Bee

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