Yes on Proposition 39: Ethics Complaint Filed Against No on 39 Campaign for Hiding Campaign Financiers From the Public, Similar to How Hidden Hands Lobbied to Sneak the Corporate Tax Loophole Into Law in the Middle of the Night in the First Place

SACRAMENTO, Calif., Sept. 14, 2012 /PRNewswire/ -- An ethics complaint was filed today against the California Manufacturers and Technology Association (CMTA), the organization leading the No on Proposition 39 campaign.  The complaint, which was filed by former California League of Conservation Voters President Thomas Adams with the Fair Political Practices Commission, shows that CMTA has been acting as the public face of the campaign, clearly spending money in opposition to Proposition 39, but without publicly disclosing how much they are spending or where they are getting this money from as required by law. 

The corporate tax loophole that Proposition 39 will close has always been cloaked in mystery.  The loophole was created in the dead of the night in a backroom Sacramento deal with no debate or disclosure in 2009 and is specifically designed so that out-of-state companies can dodge taxes, putting them at a competitive advantage over California companies. To date, no company has taken responsibility for creating the loophole, and this latest failure of legally required public disclosure furthers the secrecy surrounding the tax loophole.

In a statement, the Yes on Proposition 39 campaign said, "CMTA's aggressive campaign to keep the California corporate tax loophole open has always been a mystery, since this tax loophole specifically gives a competitive advantage to out-of-state companies at the expense of California companies.  By failing to publicly disclose who is funding the No on Proposition 39 campaign, CMTA continues their mysterious opposition."

Some of the evidence of CMTA's opposition to Prop 39 listed in the complaint includes:

--CMTA authored and paid for development of ballot arguments against Prop 39
--CMTA submitted to the Secretary of State a 50-word summary opposing Proposition 39 that will appear in the November ballot
--a CMTA official testified at a Legislative hearing opposing Prop 39  
--CMTA has sent representatives to public forums to debate against adoption of Proposition 39
--CMTA was allegedly behind a failed lawsuit brought by Lewis Uhler challenging the Prop 39 arguments

The complaint states, "Clearly, CMTA has been financing the opposition to Prop 39, however, it has failed to establish primarily formed sponsored ballot measure committee and file required campaign disclosure reports…" 

The campaign added, "The fact that CMTA is failing to properly publicly disclose their role in the No on Proposition 39 campaign, when in fact twenty-nine of CMTA's members have publicly supported a Single Sales Factor in other states raises serious questions of  intellectual honesty and ethical integrity of the CMTA.  In fact, if it is ultimately determined that all of CMTA's member companies are a party to funding the No on 39 campaign without publicly disclosing their contributions, there could be serious legal campaign violations by many top consumer companies trying to sell their goods and services in California – and we already know Californians have very strong negative reactions to companies behaving this way."

A poll released by the Proposition 39 Campaign earlier this week shows that consumer support for Chrysler, General Motors, Kimberly-Clark and International Paper drops dramatically when voters learn of their involvement in the opposition to Proposition 39.

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, which is costing California $1 billion in revenue and tens of thousands of jobs, Proposition 39 would 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. By reducing the incentive to locate new jobs out of state, the Legislative Analyst's Office predicts that the mandatory single sales factor will add $1 billion in revenues and create tens of thousands of jobs in California.

The states of 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.  In California, four companies have taken the lead to lobby successfully to keep the corporate tax loophole alive: Chrysler, General Motors, Kimberly-Clark and International Paper. These companies, which sell tens of millions of dollars in products to the state, are dodging millions in taxes and putting California companies at a competitive disadvantage.

Prop 39 is the ballot initiative that would close the out of state corporate tax loophole.

www.prop39.com
www.facebook.com/FairisFairTaxation

For more information on Proposition 39, please visit www.yesonprop39 and follow the campaign on twitter at www.twitter.com/yesonprop39.

Paid for by Yes on 39 Californians to Close the Out-of-State Corporate Tax Loophole. Major Funding by Thomas F. Steyer and Californians for Clean Energy and Jobs, sponsored by environmental organizations and business for clean energy and jobs.

SOURCE Yes on Proposition 39