California lawmakers pass tax credit for developer of stealth bomber

SACRAMENTO Calif. Thu Jul 3, 2014 8:46pm EDT

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SACRAMENTO Calif. (Reuters) - California lawmakers on Thursday passed a tax credit meant to lure aerospace companies working on a new stealth bomber to the state, but the measure will benefit only one of two teams of companies fighting to win the contract.

The plan to offer $420 million in tax breaks to an unnamed aerospace company, said by both sides to be Lockheed Martin Corp, exposed sharp divisions among Democrats and led many in the party's progressive wing to vote against the measure.

"This is just more corporate welfare, ladies and gentlemen," said Democratic state Senator Ben Hueso. "This is money we don't need to pay out, leaving our state to people who don't need it."

News of the proposed tax credit, spearheaded by the economic development office of Democratic Governor Jerry Brown, sparked ire from another company competing for the $55 billion stealth bomber contract, Northrop Grumman Corp, whose aerospace division is based in Southern California and had already promised to build the planes in the state if it won the federal contract.

"Obviously, we felt that was an unfair advantage," said Northrop Grumman spokesman Tim Paynter. "All we're looking for is a level playing field."

Representatives for Lockheed could not immediately be reached.

It was not clear why lawmakers and the governor decided to offer credits to one company and not the other. Campaign finance reports for Brown and the bill's authors, Assemblyman Steve Fox and Senator Steve Knight, did not show recent contributions as of July 3 from Lockheed or Boeing Co, the primary contractor that has teamed up with Lockheed.

But as supporters scrambled for votes, senate Democratic leader Darrell Steinberg promised the legislature would also take up a tax credit to benefit Northrop when it returns from summer recess in August. Brown's representatives said the governor would support such an effort.

Steinberg, who along with other lawmakers said wording in the bill limiting the break to "subcontractors" referred to Lockheed, said the tax credits would bring jobs.

"I don't like businesses sometimes pitting states against each other," Steinberg said. "But I also think we cannot afford to sit on our hands and not fight for our economic future."

Mike Rossi, Brown's Senior Advisor for Jobs and Business Development, said the tax credit is part of the governor's efforts to encourage businesses to expand operations in California.

"The state is actively pursuing opportunities to spur job creation in manufacturing and aerospace," Rossi said through a spokesman.

(Reporting by Sharon Bernstein; Editing by Ken Wills)

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Comments (6)
dd606 wrote:
“This is just more corporate welfare, ladies and gentlemen,” said Democratic state Senator Ben Hueso. “This is money we don’t need to pay out, leaving our state to people who don’t need it.”


Yeah, why would you want a company to do their work in CA and actually create jobs. Who needs that? Just chase them out, like you’ve chased out all the others.

This one comment is a perfect example of how disconnected from reality the CA politicians are. They actually see giving a tax incentive to a company, like it’s taking money and just putting it in the pocket of some rich guy… Then he just goes home with it and buys a new yacht or something. Meanwhile, the states that actually have a clue, are getting all the businesses.

Keep up the good work CA lawmakers… Boy, you showed those evil rich people.

Jul 03, 2014 10:40pm EDT  --  Report as abuse
Bakhtin wrote:
It is corporate welfare. It is legalised bribery, and in most advanced countries it is a crime.

Thinking that “We’ll pay $420 million if you build a factory in our state” is okay is being disconnected from reality. Especially when that bill is passed to the tax payer.

Your comment is another example of right-wing hypocrisy. Spending tax-payers money on veterans? “OMG! Can’t do that! We are bankrupt! Must cut spending”; spending tax-payers money bribing a business? “Sure… no problem…”

Jul 04, 2014 3:59am EDT  --  Report as abuse
morbas wrote:
Corporations do not pay taxes ! Everything is offshore, $16Billion…
POTUS nust declare ‘separation of Corporate and State’ and emplement a National Income Tax Code using ‘The Income Tax Act of 1913′ principles.

USA tax structure is the fault and an obstacle to worldly potential. Transaction tax code imposes disproportionate burden at the most fundamental rights of liberty, justice. Any encumbrance on sustenance is contrary to equality in the ’pursuit of happiness’. Debt and deficit is simply insufficient revenue. We can nationalize the tax code eliminating all other taxation, immediately balancing the budget(s), embracing our ’1913 Income Tax Act’ graduated income tax principle(s). The Income Tax Act of 1913 represents the best approach of combining all income into a non-exempt graduated tax base. This was sufficient to generate a roaring twenties economic plateau. Consumers pay business burdens through product cost overhead. The executives are allowed huge profits, which are relatively untaxed, and that are a major business burden. This an incentive for wealth disparity, that is self regulated by a graduated taxation at margin above subsistence wage. Separation of Corporate and State is needed to shield against oligarch subversion of the peoples Democracy.
For municipalities, property and fee based revenue are the only constitutionally available revenues. This revenue base unfairly burdens sustenance side economics and suppresses the American small businesses. This is favored by the Tea-GOP because they are funded by the 0.1%, while the DNC is supported by the 99.9% economics.

To: Office of Senator ____________________
United States Senate Washington,
D.C. 20510
To: Office of Representative_________________________
U.S. House of Representatives
Washington, DC 20515

We the people of this United States do proclaim this federal government ‘of, by and for the people’. That, in order to fairly distribute revenue burden, to satisfy ‘net income’ progressive taxation, to balance all governments budgets, and to not tax poverty;
The people mandate:
Income National Tax code that shall use margin graduated income tax principle: Margin $30k 0%, each dollar above this at a linear increasing rate {(Income*(Income/$800k[1])*90%[2]; 90%[2] limit} . Exemptions shall be prohibited, couples freely share income(s). The Federal Reserve shall amend the (90%[2],$800k[1]) rate point, and control currency printing mandated to maintaining currency availability and value. The Federal Reserve shall set the Margin rate value well (>2x) above highest of all State Poverty Level(s). Revenue shall be proportioned 1/3rd Federal,1/3rd State proportioned per cast ballot and 1/3rd Local proportioned per cast ballot.
This National Tax is a peoples tax, no other citizen taxation shall be permitted. Business shall not be taxed. The Federal Reserve shall control taxation. The people will by simple majority approve or reject all margin and rate changes at every Congressional House Representative election year ballot.

The many will find lower taxes, the few will find no incentive for aggregious wealth disparity. The ‘many’ pay most all taxes, the ‘few’ little if any.

Jul 04, 2014 9:28am EDT  --  Report as abuse
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