Tax-free in California

State Treasurer Phil Angelides didn’t come to town to talk about the recall, even though reporters couldn’t resist asking about it. Instead, Angelides stood his ground and said, “I’m actually doing my job as treasurer of California,” which is accounting for the state’s ever-diminishing operating revenue.

Angelides, joined by local labor leaders, held a press conference this week at the California Department of Fire Station No. 42 in northeast Chico to ask—rhetorically—why state Sen. Sam Aanestad, R-Grass Valley, had voted against a bill designed to close a tax loophole that allows 18 multinational industries to do business in the Golden State, while paying no taxes. Over the next 10 years, the treasurer said, the state stands to lose as much as $132 million in revenue.

Aanestad, who is a member of the senate appropriations committee, voted with four other Republicans against the bill, SB 1067 by Sen. Jackie Speier, D-Hillsborough, when it was in committee on July 21. Seven Democrats voted for the bill, which needs a two-thirds approval from the full Legislature and will be back on the Senate floor later this month.

With six CDF fire fighters behind him, Angelides addressed a small gathering of local press and Democrats to push home his point that those companies, which establish off-shore headquarters in places like the Bahamas, Barbados or the Cayman Islands are not paying state taxes.

This tax-escape ploy is especially appalling, Angelides said, in these days when funding education and public safety is getting harder to do.

“Senate Bill 1067 asks the question, ‘what are our values?'” Angelides said. “American multinational corporations, you have an obligation to pay your fair share in taxes.”

As of June 30, 18 publicly traded companies had moved offshore to avoid paying taxes. Those companies include Seagate Technology, based in Scotts Valley, but with headquarters as of last year in the Cayman Islands, and the Berkeley-based Xoma Corporation, with headquarters since 1999 in Bermuda.

“Only 18 companies have pulled this shenanigan so far but more are looking to do it,” Angelides said.

Tax losses as they stand right now would be equivalent to 300 fire trucks, 13 elementary schools or 100 more fire fighters for the next 10 years.

“This is real money and it will have a real impact here in Chico,” the treasurer said. “Does Sam Aanestad represent special interests or the people of Butte County?”

The “run-away” industries, as Angelides called them, range from one that distributes hair care products (Helen of Troy, Ltd.) to an oil and gas contractor (GlobalSantaFe—Global Marine) to an electrical component, clothes hanger and undersea cable manufacturer (Tyco International).

Angelides said he did not know why Aanestad and the other Republicans in the committee voted against the bill “other than trying to protect multinational companies” and a “dogmatic” aversion to taxes.

He said if Aanestad made the argument that spending should be cut instead of looking to gather these lost taxes, he was wrong, as this was not new revenue but rather an attempt to stop the further diminishing of revenues the state currently collects.

North Carolina has a passed a similar bill and Pennsylvania and Massachusetts have them in the works. Here in California, Sen. John Burton, D-San Francisco, is working on a bill that would ban the state from contracting with any of the 18 industries.

“Sometimes things are complicated and sometimes things are simple,” Angelides said at the end of the conference. “Please ask Mr. Aanestad why multinational organizations don’t have to pay their taxes. It’s unpatriotic.”

Angelides said he is visiting over the next few days the districts of the other four senators who voted against the bill.

Aanestad could not be reached for comment by press time, and the people we talked with in his office said they could not speak for the senator.