Gino DiCaro

Don't forget to vote 'No' on Props 37 and 39

By Gino DiCaro, VP, Communications

Capitol Update, Oct. 25, 2012 Share this on FacebookTweet thisEmail this to a friend

CMTA's Board of Directors voted earlier this year to oppose propositions 37 -- labeling of genetically modified foods -- and 39 -- mandatory single sales tax formula --  in the upcoming General Election.  Don't forget to do the same on November 5.  Here is why we opposed the two propositions.

Oppose Proposition 39

Prop 39 is a $1 billion tax increase on California manufacturers.

Multistate tax policy change 
Proposition 39 would eliminate the three-factor apportionment formula that has been a part of California law since 1966 and instead impose a single sales factor (SSF) calculation on all multistate businesses. In 1966, California adopted an equally weighted, three-factor apportionment formula for taxing multistate businesses – payroll, property and sales. In 1974, California joined an interstate compact adopting this formula. The compact requires that participating states offer the three-factor formula, but allows states to offer an alternative apportionment formula, so long as the taxpayer can elect which formula to apply. In 1993, the Legislature amended the three-factor apportionment formula by giving double weight to the sales factor. In 2009, the Legislature retained the revised three-factor apportionment formula (double weight on sales) but provided an alternative SSF apportionment formula that allows multistate businesses to apportion income to California using only their percentage of sales in California.

The 2009 deal and “loopholes”
The proponents argue that Prop 39 “repeals a shady backroom legislative deal enacted in 2009” that created a tax “loophole” for “out-of-state” companies. That is false and misleading. In fact, Prop 39 would repeal a method for income apportionment based on three factors acknowledged by California and most other states as a legitimate way to apportion income for tax purposes. The bi-partisan agreement in February 2009 allowed use of SSF to help stimulate investment and hiring in the state for the companies who might otherwise invest elsewhere. At that time the Legislature rightfully allowed for the method to be elective in nature, allowing the longstanding method to be used by employers for which SSF is actually a disincentive to invest. By moving to mandatory SSF, Prop 39 punishes taxpayers who neither sought SSF nor ever planned to use it. According to prop 39 Lenny Goldberg the ability to change back and forth on a yearly basis, not the formula itself, is the supposed “loophole”.  That is something that could easily be fixed, and it’s not what Prop 39 does. The arguments in the ballot statement are misleading to voters.



Oppose Proposition 37

Proposition 37 would ban the sale of tens of thousands of perfectly-safe, common grocery products only in California unless they are specially repackaged, relabeled or made with higher cost ingredients. Prop 37 is a deceptive, deeply flawed food labeling scheme that would add more government bureaucracy and taxpayer costs, create new frivolous lawsuits, and increase food costs by billions — without providing any health or safety benefits. That’s why Prop 37 is opposed by a broad coalition of family farmers, scientists, doctors, business, labor, taxpayers and consumers.

Conflicts with science
Biotechnology, also called genetic engineering (GE), has been used for nearly two decades to grow varieties of corn, soybeans and other crops that resist diseases and insects and require fewer pesticides. Thousands of common foods are made with ingredients from biotech crops. 

More bureaucracy and taxpayer costs
Prop 37 forces state bureaucrats to administer its complex requirements by monitoring tens of thousands of food labels at tens of thousands of grocery stores, retail outlets, farms and food companies. In fact, it sets no limit on how many millions would be spent on bureaucracy, red tape and lawsuits.  It’s a blank check … paid by taxpayers.

More lawsuits
Prop 37 creates a whole new class of “headhunter lawsuits,” allowing lawyers to sue family farmers and grocers without any proof of harm. It subjects farmers, grocers and food companies to huge litigation costs and lawyer payouts.

Higher food costs
Prop 37 forces farmers and food companies to implement costly new labeling, packaging, distribution, recordkeeping and other bureaucratic operations that will cost billions of dollars to implement.  Or, companies will be forced to switch to higher-priced, non-GE ingredients, like organics, in order to sell food in California.  Economic studies show this would increase food costs for the average family by hundreds of dollars per year – a hidden food tax that would especially hurt seniors and low-income families who can least afford it.

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