Eliminating a corporate tax break is pitched as a way to make up for federal healthcare cuts

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SACRAMENTO — A corporate tax policy that costs California billions in lost tax revenue each year could be coming to an end as the state struggles to backfill federal cuts and resolve a looming budget deficit.The proposed legislation, Assembly Bill 1790, would repeal the so-called “water’s edge” tax break, a filing option that allows multinational corporations to exclude the income of their foreign subsidiaries from state taxation.“The tax bills of the wealthiest, most powerful corporations in the world are at all-time lows,” Assemblymember Damon Connolly (D-San Rafael), one of the primary sponsors of the bill, told The Times.

“Meanwhile, we’re struggling to fund programs that feed children — I think everyone understands that now is the time for long-term budget solutions.”Republican Sen.Roger Niello, vice chair of the Senate Budget and Fiscal Review Committee, said the bill to repeal water’s edge won’t receive support from GOP lawmakers.

He said the legislation would lead to double taxation, meaning the same income would be taxed twice by different countries, and compared taxing corporations’ foreign profits to enacting tariffs.“California already has the reputation of being not particularly business friendly,” said Niello (R-Fair Oaks).“This would really just compound that.”A spokesperson for Gov.

Gavin Newsom did not respond to a request for comment about the governor’s views on the proposal.Newsom, however, has largely shunned new tax increase proposals.

Legislation to increase taxes requires a two-thirds approval vote instead of a simple majority.Democrats in California hold a supermajority in both the Assembly and Senate, meaning the bill could still pass without Republican support, but it would require backing from the progressive and moderate wings of the party.Kayla Kitson, a senior analyst at the California Budget and Policy Cent...