Taxation

In the coming months, parents will receive hundreds of dollars as the Internal Revenue Service begins paying out the Advance Child Tax Credit, providing financial support to families and combating child poverty. Yet one significant group will be left out: parents of undocumented and certain non-citizen children.

Back of the envelope calculations indicate significant revenue can be raised if California conforms to GILTI.

The California Legislature is considering a bill (AB 71) that would subject 50% of a category of income derived from federal tax law, known as Global Intangible Low-Taxed Income (GILTI), to California’s corporate income tax. In short, GILTI represents an attempt by the federal government to estimate, by formula, how much income — really earned in the US — has been shifted to low-tax jurisdictions to avoid US tax.

California’s tax system is upside down at the top: Millionaires pay higher rates than billionaires. California’s wealthiest residents — who have partaken in a $4-trillion increase in billionaire wealth in the last year — contribute next to nothing to state coffers. Meanwhile, many less fortunate Californians are suffering.

Help may be coming at long last from the federal government, but California local governments are likely to face fiscal challenges as a result of the pandemic and recession for a long time. After all, many of those local governments faced major issues before the current crisis.

A year into the COVID-19 crisis, the gap between corporate profits and economic security for the average American is wider than ever. Since March 2020, 45 out of 50 of America’s largest companies have made a profit and in some cases the profit has been quite substantial. 

COVID-19 has been catastrophic for public transit. Plunging fare and tax revenues are forcing drastic cuts. San Francisco’s transit agency could lay off more than one in five workers.