Prop 39 Campaign Hires Investigators To Follow The Money And Determine Who Is Responsible For Sneaking Corp Tax Loophole Into Law In 2009 And Whether Any Disclosure Laws Were Broken

Initial Focus Will Be On The Actions of General Motors, International Paper and Kimberly-Clark Given Their Strong Support For The Loophole

Team Of Award-Winning Journalists, Tax Evasion Experts And Researchers Retained To Expose the Corporations And Lobbyists Responsible For the Tax Loophole That Is Hurting California Businesses And Costing The State $1 Billion In Revenues

Sep 24, 2012, 13:56 ET from Yes on Prop 39

SACRAMENTO, Calif., Sept. 24, 2012 /PRNewswire/ -- Today, the Proposition 39 campaign announced that it has hired a team of investigators to conduct an in-depth inquiry to determine who is responsible for successfully lobbying the state legislature for a corporate tax loophole that rewards out-of-state corporations with tax breaks for creating jobs outside of California.  To this day, there has been no public disclosure of which companies and lobbyists were behind a late-night backroom deal in the waning hours of the 2009 legislative session.

The loophole puts California companies at a competitive disadvantage, allowing out-of-state companies are able to avoid millions of dollars in taxes.  Proposition 39 would close the loophole, requiring out-of-state companies to pay their fair share and level the playing field for California companies, while generating $1 billion in revenues and creating tens of thousands of jobs in California.

The Campaign for Yes on Proposition 39 issued the following statement:

"This team of eagle-eyed investigators has been given a specific mandate: follow the money wherever and to whomever it may lead to in order to both determine who was behind the loophole and whether any laws were violated.  The existing loophole that gives out-of-state corporation a tax break for creating jobs outside of California was inserted into law in a back room deal in the closing hours of the 2009 state legislative session -- with no public debate and no public disclosure by lobbyists.  Given that the loophole benefits out-of-state corporations while hurting California businesses and killing California jobs, beginning with International Paper, General Motors and Kimberly-Clark, it is imperative that we follow the money.  California law requires public disclosure of lobbyists -- and in this case no lobbyists registered on behalf of a law that hurts all California citizens and every California-based business.  Proposition 39 wants to determine not only who was behind the loophole in the first place but whether any laws were violated in the process."

The California Tax Transparency Project team conducting the inquiry includes:

Chairman Jack A. Blum, Esq. -- Widely considered as one of the top experts in the world on corporate tax avoidance, Blum has served as an advisor to the US government on tax evasion and financial crime and is the former chief investigator for the US Senate Foreign Relations Committee.

William Ainsworth -- A former Sacramento correspondent for the San Diego Union-Tribune, Ainsworth was part of a team that won the Pulitzer Prize.

Russell Carollo -- A former reporter for the Sacramento Bee, Carrollo is a recipient of the Pulitzer Prize.

Glenn R. Simpson -- A former Wall Street Journal investigative reporter, Glenn Simpson is the recipient of several journalism awards. He is the author (with Larry J. Sabato) of Dirty Little Secrets: The Persistence of Corruption in American Politics.

The corporate tax loophole in California is specifically designed so that out-of-state companies can dodge taxes, putting them at a competitive advantage over California companies.  The loophole, which gives companies an option of calculating their income based on a mixture of payroll, property, and sales, gives multi-state corporations an incentive to keep jobs and investment in other states so that they can reduce their taxes in California.  Basically, the fewer Californians out-of-state-companies employ, the less they pay in taxes.

To fix the loophole, many in California want to require out-of-state companies to pay taxes based on one factor -- their sales in California -- instead of giving them a choice between sales, property, and payroll.  The "Mandatory Single Sales Factor" would prohibit multi-state companies from reaping profits on their sales in California while dodging their fair share of California state taxes – and it would force out-of-state companies to pay the same as in state corporations.  

States like Colorado, Georgia, Illinois, Indiana, Iowa, Maine, Michigan, Nebraska, New York, Oregon, South Carolina, Texas and Wisconsin have all adopted a mandatory single sales factor approach – without a loophole – to provide an incentive to companies to invest in their states. Only California and one other state – Missouri – have this glaring loophole that allows big corporations to pick and choose the way they pay their taxes.

Prop 39 would close the tax loophole and put California-based companies on a level playing field, saving a billion dollars of taxpayer funds that will be used to fund schools and create tens of thousands of jobs.

For more information on Proposition 39, please visit  Follow the campaign on twitter at and


Lisa Cohen, 310-395-2544

SOURCE Yes on Prop 39