Senate Joint Resolution No. 32

Introduced by Senator Correa

August 7, 2014

Senate Joint Resolution No. 32—Relative to the biotechnology industry.

LEGISLATIVE COUNSEL’S DIGEST

SJR 32, as introduced, Correa. Technology: biotechnology industry: corporate taxation.

This measure would declare the support of the Legislature for federal tax policies designed to encourage growth, incentivize corporations to remain in the United States, and reduce competitive disadvantages for companies based in the United States, particularly those in the biomedical and life sciences industry. The measure would further urge the President and Congress to enact specified tax strategies to encourage domestic economic growth.

Fiscal committee: no.

WHEREAS, California has a rich history of innovation and a
long list of entrepreneurs and corporations that have changed the
world in the high technology and biotechnology industries and is
proud of its reputation as a global leader in the world economy;
and

WHEREAS, The biotechnology industry was born in California
in 1976, with the Bay Area being home to the first biotechnology
company, the first biotechnology public offering, and the first
biotechnology drug to be approved by the United States Food and
Drug Administration; and

WHEREAS, The life sciences industry, including research,
development, and educational activities as well as the
manufacturing of biopharmaceuticals and medical devices, has
had a significant impact on California by creating life-saving
treatments for patients, beginning in the lab and spanning years of
efforts to transform discoveries into vaccines, diagnostics, devices,
and therapies to improve patients’ lives; and

WHEREAS, The life science and biomedical industries are
driving the economy forward both at the national level and in
California, creating a highly educated and well-paid workforce
and generating billions of dollars of tax revenue that support critical
public service programs; and

WHEREAS, California’s life science industry contributes
significant economic benefits to California, creating $258 billion
in economic activity and generating over 1 million jobs paying
$76 billion in salaries, wages, and benefits. California companies
introduced 8 new therapeutics to patients in 2013, representing
roughly a third of the new molecular entities launched last year.
The biomedical industry in California alone employs over 267,000
people in 2,490 companies with total revenue of $96 billion; and

WHEREAS, The United States biomedical industry, which
includes biopharmaceutical, medical devices and related research
and development, testing, and labs, employed 1,219,200 people
in 2007; and

WHEREAS, The existing federal and state tax structure is a
disincentive for companies that are domiciled domestically, and
makes American businesses more vulnerable to foreign takeovers;
and

WHEREAS, The basic United States corporate income tax rate
is as high as 39 percent for certain corporations, the highest rate
in the world, while the average rate among other major
industrialized countries is 25 percent; and

WHEREAS, Existing tax policies make companies based in the
United States and California less competitive in the global market,
resulting in 20 major American companies over the last 2 years
reincorporating outside of the United States to reduce their tax
liabilities; and

WHEREAS, Favorable tax policies in foreign countries may
encourage American firms to locate research and development
facilities, production facilities, distribution networks, and
headquarters overseas, taking with them countless jobs and
substantial tax revenue and economic activity that they produce;
and

WHEREAS, In light of these challenges, it is necessary to
protect American jobs, grow our domestic economy, and enable
our companies to compete globally; now, therefore, be it

Resolved by the Senate and the Assembly of the State of
California, jointly, That the Legislature declares its support of
efforts to encourage more broad-based federal tax policies that
promote job growth, incentivize corporations to remain in the
United States, and level the playing field for companies based in
the United States by reducing competitive disadvantages for all
industries, particularly the biomedical and life sciences industry;
and be it further

Resolved, That the Legislature urges the President and Congress
of the United States to implement tax strategies that promote
domestic economic growth, such as the reduction of the federal
corporate tax rate, renewal and permanent establishment of the
federal research and development tax credit, and repatriation of
foreign-earned income; and be it further

Resolved, That the Secretary of the Senate transmit copies of
this resolution to the President and 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.