California Corporations Pay Less Taxes Than in the 1980s

Fact Sheet: Corporations Pay Far Less of Their California Income in State Taxes Compared to the Early 1980s

The Tax Cuts and Jobs Act (TCJA), signed into law in 2017 by President Trump, provides corporations substantial cuts in federal tax rates and other tax breaks at a time when they already contribute far less of their California income in state taxes than they did a generation ago. A new Fact Sheet  from Senior Policy Analyst Jonathan Kaplan shows that since the early 1980s California lawmakers have enacted a number of corporate tax breaks and cut corporate tax rates. This helps to explain how the share of California corporate income paid in state taxes declined by more than half during the past three decades. This Fact Sheet points out that California’s state budget would have received $10.9 billion more revenue in 2016 had corporations paid the same share of their income in taxes that year as they did in 1981.   This analysis also underscores that corporations are likely to pay far less of their income in federal taxes beginning in 2018 than they have in recent years due to the TCJA. As a result, they can afford to contribute more to support California's public systems, such as higher education and workforce development. These kinds of investments would not only help improve the lives of Californians, but also boost the state’s economy and produce an educated workforce that would benefit the state’s employers, including major corporations. Get the Fact Sheet. Share the new Fact Sheet by clicking on the button below.