BILL NUMBER: AJR 12	ENROLLED
	BILL TEXT

	ADOPTED IN SENATE  AUGUST 12, 2010
	ADOPTED IN ASSEMBLY  JULY 13, 2009
	AMENDED IN ASSEMBLY  JUNE 3, 2009
	AMENDED IN ASSEMBLY  MAY 26, 2009

INTRODUCED BY   Assembly Member Block

                        MARCH 27, 2009

   Relative to taxation of corporate income sheltered in offshore tax
haven jurisdictions.


	LEGISLATIVE COUNSEL'S DIGEST


   AJR 12, Block. Offshore tax haven jurisdictions.
   This measure would request that the President and the Congress of
the United States enact legislation that closes the corporate federal
tax loopholes currently allowing the sheltering of income in
offshore tax haven countries, and, instead, promotes transparency,
cooperation, and tax compliance.



   WHEREAS, In bad economic times, states are forced to cut essential
services or raise taxes in order to balance their budgets, and
recapturing lost revenues otherwise due to a state is one mechanism
by which government can reduce painful cuts without raising new
taxes; and
   WHEREAS, A United States corporation is taxed on all of its
income, regardless of source, and is allowed a credit for any taxes
paid to a foreign country on its foreign-source income; and
   WHEREAS, A United States corporation can operate globally in
foreign countries directly through a branch or indirectly through its
ownership in a foreign subsidiary; and
   WHEREAS, Jurisdictions listed as "tax havens," some of which have
no or nominal taxes, or financial privacy jurisdictions have been
identified on reports prepared by the Organization for Economic
Cooperation and Development (OECD), National Bureau of Economic
Research (NBER), and other sources; and
   WHEREAS, The United States Department of the Treasury has found
that some United States corporations have aggressively moved income
to offshore jurisdictions to avoid United States taxes because income
that should properly be attributed to activities in the United
States is being attributed to those tax haven countries; and
   WHEREAS, The United States Senate Permanent Subcommittee on
Investigations and other federal governmental entities have released
findings regarding the growth of multinational corporations' use of
tax haven countries to shelter income that would otherwise be
reported in the United States through use of related companies with
little or no substantial economic presence or significant economic
activity of the corporation in the tax haven country; and
   WHEREAS, President Obama has voiced his support for efforts to
combat offshore tax evasion and the United States Commissioner of
Internal Revenue has stated that the Internal Revenue Service (IRS)
has made closing this particular loophole a top priority; and
   WHEREAS, United States Senator Carl Levin introduced the Stop Tax
Haven Abuse Act on March 2, 2009, to target offshore tax abuses that
deny the United States Treasury an estimated $100 billion in revenue
each year, reward tax dodgers using offshore secrecy laws to hide
legitimate taxable income from the United States, and burden other
United States taxpayers who lawfully report their appropriately
United States-sourced income; and
   WHEREAS, Some states in the United States have enacted legislation
to include the income and apportionment factors of affiliated
corporations doing business in or having income derived from or
attributed to a tax haven country; and
   WHEREAS, California permits corporations that conduct business in
the state to elect to calculate their corporate tax liability due to
the state based on income only from sources within the United States
and, as identified by federal officials, corporations are known to
redirect income to foreign subsidiaries located in offshore tax haven
countries to hide those corporations' true income and to avoid
paying their fair share of state tax; and
   WHEREAS, The Franchise Tax Board of California estimates that
California's direct revenues lost to corporations sheltering funds in
tax haven countries that should appropriately be sourced to
activities in California is approximately $130 million per year and
growing; and
   WHEREAS, Other states in the United States are losing revenues
from the same offshore sheltering practices of corporations; now,
therefore, be it
   Resolved by the Assembly and the Senate of the State of
California, jointly, That in order to reduce anticipated cuts to
services and lessen the need for increased taxes, the Legislature of
the State of California respectfully requests the President and the
Congress of the United States to enact legislation that closes the
corporate federal tax loopholes currently allowing the sheltering of
income in offshore tax haven countries, and, instead, promotes
transparency, cooperation, and tax compliance; and be it further
   Resolved, That the Chief Clerk of the Assembly transmit copies of
this resolution to the President and the Vice President of the United
States, to the Speaker of the House of Representatives, to the
Majority Leader of the Senate, and to each Senator and Representative
from California in the Congress of the United States.