As state lawmakers turn their attention to addressing California’s affordable housing crisis, one Democrat is proposing to raise taxes on the state’s largest companies to fund new construction.
Assemblyman Marc Levine (D-Marin) is working on legislation to raise the state’s corporate tax rate one percentage point — from 8.84 percent to 9.84 percent — on companies with 500 or more employees. The new revenue, which Levine estimates at roughly $500 million annually, would be spent on building affordable housing.
As with any tax increase, it’s likely to be a controversial proposition.
“Corporations that pay poverty wages are creating the problem,” Levine said. “Corporations that are thankfully paying high wages are then having employees displace others who aren’t making as much.”
The new revenue stream would address one pillar of the three-pronged approach that Governor Jerry Brown and Democratic leaders agreed to work on when the Legislature returns later this month.
Other approaches already discussed by Democratic lawmakers and the governor include a statewide bond measure, and the streamlining of local laws to make it harder to block development.
The State Senate has already passed one bill to bankroll construction of housing for low and middle-income Californians. Senate Bill 2, by Sen. Toni Atkins (D-San Diego) would place a fee on certain real estate transactions, such as a mortgage refinance.
But Levine says homeowners who would pay that fee “are typically middle-class Californians.”
“What we’ve seen since the Great Recession is that the corporations and the ultra-rich are the ones who have benefited from the economic rebound the most,” he added. “Yet they’re not getting taxed in this to provide the affordable housing.”
The California Chamber of Commerce did not have an immediate response to Levine’s proposal to raise taxes on large businesses, and the advocacy group hasn’t taken a position yet on Senate Bill 2.
But the group has emphasized the limits of pouring state money into housing development.
“While the state places significant focus on funding, according to the Legislative Analyst’s Office report, it would have to raise upwards of $250 billion to subsidize itself out of the housing crisis—a feat that cannot be accomplished,” wrote CalChamber policy advocate Louinda Lacey, in a summary of housing legislation last week.
The housing debate is expected to occupy lawmakers’ attention during the final stretch of the legislative year. After lawmakers return on August 21, they’ll have four weeks to pass bills before an interim recess begins on September 16.