Tax Fairness Commission

April 22, 2021

In the midst of a pandemic and economic crisis, we don’t have time to be anything other than bold and visionary. In order to End Poverty in California, I know that we need sweeping tax reform. I believe the plans detailed below within the Tax Fairness Commission will support #OurCalifornia and will bring about the robust safety net and positive socioeconomic changes that our State needs to see during this declared State of Emergency and long after. Furthermore, I believe the Tax Fairness Commission can End Poverty in California.

I can’t make paying taxes pleasant, but the very least the State can do is make it simpler, equitable and our tax foundation’s core principle – the ability to pay.

Multiple nonpartisan tax fairness organizations and our own Federal government have long confirmed that taxing investment income at significantly lower rates than salaries and wages has lost $1.3 trillion over the last 10 years. We can see the inequities and inequalities of California’s tax code playing out with tax breaks, changes in income from capital gains and dividends, loopholes, and outright tax evasion – all of which are heavily utilized by California’s wealthy.

High-income households and large Corporations benefit most from California’s Tax Breaks to the tune of more than $63 billion dollars in lost State revenue each year, which is an amount equivalent to more than 40% of the 2019-20 State or California General Fund budget. And that’s before legal loopholes and blatant tax evasion.

Still, the largest contributor to increasing income inequality both in our State and our Nation has been taxation changes in income from capital gains and dividends which solely benefit the wealthy. As a result, both our Federal & State governments have previously upheld austerity tactics on the poor to compensate for the wealthy not paying their fair shares. In fact, 30 percent of income inequality is due to unfair taxes and subsequent budget cuts to social services and benefits. It is time this changes.

As this COVID-19 pandemic and subsequent economic crises have shown us, the wealthy and the Corporations they own in this State have seen their wealthy rise astronomically, while #OurCalifornia saw 25% unemployment, struggled to remain in our homes and regularly relied on charitable food lines to keep food on our tables. California Billionaires saw their net worth jump $313 Billion, averaging an additional 45% increase, 7 times the State’s Revenue Shortfall for both 2020 & 2021; resulting in the State of California & locality governments significantly cutting critical public services. This has always been unacceptable, and yet cruelty is compounded as Governor Newsom has allowed this to continue during a pandemic and economic crises of these proportions.

No more.

It’s time for the wealthiest Americans and big corporations to pay their fair share of taxes. When they take unfair advantage of the many loopholes in the tax code the rest of us pick up the tab.

Instead of cutting education funding for our children, adults & futures, instead of postponing critical infrastructure repair across the State, instead of cutting MediCAL during a pandemic, instead of forcibly shuffling our unhoused, failing to protect small businesses, renters and homeowners only to say that we have no other recourse… TAX. THE. RICH. AND. CLOSE. THE. LOOPHOLES.

The point is to create a Tax Fairness Commission (TFC) during this declared State of Emergency & Impacted Parties Council within TFC with the goal of keeping the TFC long after the pandemic and economic crisis ends for the betterment of society and for the futures of #OurCalifornia.

As your gubernatorial candidate for 2022, I proudly call for our government to implement this policy. I intend to End Poverty in California, and these are the Tax Fairness Commission policies and the vision I believe will achieve it:

Part 1: Close State of California Individual & Corporate Tax Loopholes effective immediately:
- Increasing Large Corporation Taxes & reducing their substantial tax breaks;
- Increasing the tax on business revenue over $100million from 9% to 25%;
- Close Commercial & Corporate tax loopholes for property to be taxed at current market value;
- Increasing the tax on business revenue over $100million from 9% to 25%;
Part 2: End State subsidies immediately to any corporation that utilizes offshore accounts;
Part 3: End State subsidies to any corporation that has significant CA labor violations, class action suits, or outstanding and unresolved labor infractions (Ex. SpaceX & Tesla lost multiple class actions, unresolved hazardous conditions for both the State & OSHA, etc.);
Part 4: #OurCalifornia Individual Tax Reform:
- No increase in State Personal Income Taxes for any Californian with an annual income under $350,000:
  - All Californians individually making $20,000 – $49,999 per year individually, or $40,000 – $99,999 per couple, will receive an additional State obligatory minimum tax refund of 25% of their earned income;
  - And all Californians making $50,000 – $75,000 per year individually, or $100,000 – 150,000 per couple, will receive an additional State obligatory minimum tax refund of 15% of their earned income;
- Create and implement temporary income tax code applied to annual income tax brackets of $350,000, $500,000 & $1,000,000;
- Create and Implement a Wealth Tax on California’s Top 4%. Our Billionaires and Millionaires (790,200 of 39.51 million Californians):
  - A modest 3% wealth tax from those 165 Californians alone would provide the State and #OurCalifornia, $21.711billion for desperately needed public services and programs;
- Simplify Tax Filing with Postcard and Precision Withholding;
Part 5: #OurCalifornia Small Business Tax Reform:
- Expanding #OurCalifornia’s Capital Access Program for Small Business under the Public Bank of California;
- Simplify Small Business State Tax Filing to One Page;
Part 6: Create a Public and Transparent TFC Impacted Parties Council which allows for feedback, representation, research and the opportunity to create legislation to better the lives and futures of #OurCalifornia; Limitless but critically needed TFC-Funded possibilities include:
- TFC-funded #ChildcareForAll
- TFC-funded Locality Infrastructure Revitalization Initiatives that Californians within individual localities need
In the true spirit of Upton Sinclair’s End Poverty in California campaign, I will also call on fellow Socialists, Socialist Governors, and fellow Socialist gubernatorial campaigns to adopt and implement the same in the hopes of again inspiring previously successful End Poverty in Oregon and End Poverty in Washington campaigns. I will call on fellow Socialists, Socialist Governors, and fellow Socialist Gubernatorial campaigns across this country to adopt and implement the same;

I am proud to have connected our Policies and Executive Orders for this Tax Fairness Commission and its subsequent sweeping tax reforms and policy positions to precedent of previously passed CA legislation, bills currently making their way through California State Legislature, policy insight from the California’s own Public Policy Institute, California Budget Center, Americans for Tax Fairness, the Center on Budget and Policy Priorities, recent David Binder Research polling with an approval rating from 70% of Californians to taxing millionaires more during this pandemic, and look forward to working with some of the greatest minds in taxing reform & economic justice including California’s very own Darien Shanske, JD, PhD & MA.

As Governor, I will:

create a Tax Fairness Commission;
tighten tax code and legislation to ensure the Wealthy and Large Corporations pay their fair share;
simplify filing procedures by reducing State bureaucracy and wasted taxpayer time; and
reduce taxes owed by both small businesses and individuals earning under specific economic thresholds.

These are policies and action plans that finally address our State’s glaring inequities and favoritism of the wealthy.

As your Governor, I intend to End Poverty in California, and this is how the Tax Fairness Commission will help us achieve this:

Part 1: Close State of California Individual & Corporate Tax Loopholes effective immediately

#OurCalifornia have all seen “10 tax secrets of the Rich they don’t teach you anywhere”and countless other pieces along those lines, with well known and shocking secrets. The wealthy write off yachts, helicopters, and mega-mansions, and still find ways to write off practical things like cat food expenses, but it’s important to understand that those articles skim the financial truth. The rich really DO manage their money differently, file taxes differently, all while legally and illegally evading their social obligations because they’ve lobbied our politicians and governments over recent decades to ensure their racket can continue.

The top 1% are cheating us out of a quarter-trillion dollars in taxes every year. This looting is well documented within the Congressional Budget Office report which found that between 2011 and 2013, $381billion in taxes went unpaid every single year. Couple that data with recent Harvard University research showing that the top one percent of income earners are responsible for 70% of the tax gap, and we can all see the full picture: the wealthiest of the wealthy are depriving the American and Calfiornian public of around $266 billion of the owed tax revenue every year.

The Tax Code within our State and Country no longer adheres to the core principle of the ability to pay – the idea that taxes should be based on a person’s capacity to pay taxes. Furthermore, our State and Federal Tax Code don’t reflect how the wealthy make or keep their money. This must change.

There are a plethora of nonpartisan organizations that have done the work for decades announcing how we can right those wrongs. While many of these are applicable for Federal tax reform, many of these are also applicable under CA Tax Code. And in these unnecessarily trying times of both a pandemic and economic crisis, it’s important that Californians have a Gubernatorial Candidate who fully supports federal and State Tax Legislation Overhaul. Policies that Americans for Tax Fairness, the Center on Budget and Policy Priorities, California Budget & Policy Center, & the Public Policy Institute of California have recommended the following policies which I would implement as your Governor:

Tax income from investments like work income or as physical property;
Cap tax deductions at 28% for the wealthiest Americans;
Strengthen the estate tax. Close the income tax loophole that lets wealthy people avoid capital gains taxes by holding their assets until they die. Their heirs then escape paying taxes on these gains.End/close grantor retained annuity trusts (GRATs) loophole & tax break that’s used to pass along considerable assets tax-free. (These are used heavily and favorites of the Waltons, Sheldon Adelson, wealthy Silicon Valley and Wall Street Financiers);
Enact an Inheritance Tax;
Pass the Buffett Rule. The Buffett rule, inspired by billionaire Warren Buffett, would require millionaires to pay a minimum tax rate of 30%. This will guarantee that the wealthy will not pay a smaller share of their income in taxes than a middle-class family pays. It would raise $72 billion over 10 years;
Close Wall Street’s carried interest loophole. Wealthy private equity managers use a loophole to pay the lower 23.8% capital gains tax rate on the compensation they receive for managing other people’s money. Clothing this loophole ensures they pay the same rate as others at their income level who receive their compensation as salary. This would raise $17 billion over 10 years;
Eliminate the payroll tax loophole for S corporations. This loophole allows many self-employed people to use “S corporations”to avoid paying payroll taxes entirely. This tactic was used by Newt Gingrich and John Edwards to avoid taxes, closing the loophole would require treating this income as salary rather than profit, making it subject to payroll taxes. This would raise a minimum of $8 billion over 10 years within the State of California;
End the California Tax Statute which allows taxpayers conducting a wholly intrastate unitary business to choose between filing on a separate or combined reporting basis. Create legislation which mandates combined reporting — which would force companies to file a single tax return for their entire business and restrict their ability to move money around simply to avoid state taxes.
- As “separate reporting” for subsidiaries gives large corporations wide latitude to shift significant income out of the state and away from State Income Taxes;
- Combined reporting is also fairer to smaller businesses that can’t afford to exploit a web of subsidiaries;
Reinvigorate the corporate tax code by raising rates, closing loopholes, repealing incentives and applying strong economic sanctions including asset forfeiture when Corporations offshore profits and outsource jobs;
End tax breaks for wealthy businesses, including special real-estate provisions and various unproductive tax breaks primarily used by large corporations and the rich;
Tap new revenue sources, such as taxes on Wall Street speculation, Carbon pollution, Toxin pollution, etc;
End Pass-through business deductions;
End preferential rates for capital gains and dividend income by raising their rates to match ordinary income– wages and salaries
Tax code could impose a “mark-to-market”system, which levies tax annually on the gain in value of assets that high-income individuals hold, whether or not they are sold.
Repeal the “stepped-up basis”tax break, which enables wealthy people who have avoided capital gains taxes on the growth of assets during their lifetimes to pass them to their heirs free of capital gains tax.
- By taxing the unrealized capital gains of affluent households when appreciated assets are transferred to heirs. Since future tax liability on unrealized capital gains would no longer be eliminated at death, affluent owners of valuable assets would have less incentive to defer tax by waiting to sell them; instead, they would be more likely to sell the assets when it made economic sense to do so.
Address Other Provisions Encouraging Capital Gains Tax Avoidance. Limit the amount of capital gain that a taxpayer can defer through “like-kind exchanges” to $1 million per year and disallow the like-kind exchange loophole for sales of artwork or other collectibles.
Opportunity zone and qualified small business stock tax breaks directly benefit wealthy investors and usually fall well short of producing socially beneficial investment or outcome on a substantial scale, I would endorse substantially reform and tightening of opportunity zone tax breaks — and devote the freed-up resources to public investments more directly benefiting underserved and marginalized populations and communities in each of our 58 counties in California.
Pursue a parallel effort to rebuild California’s State Tax Board and System to be what we need– for tax compliance, for our futures, for #OurCalifornia dramatically increasing the CA Tax budget, enabling it to devote substantially more staff to audits of the wealthy to ensure that extreme wealth does not slip through the cracks, and make the valuation process is less complex for #OurCalifornia and prone to avoidance.
Deputize nonprofit organizations like the nonpartisan California Budget Center & the Public Policy Institute of California

Part 2: End State Subsidies Immediately to any Corporation that utilizes offshore accounts or who utilize subsidiary offshores to evade taxation

The State of California must stop providing subsidies (#OurCalifornia tax dollars) to Corporations that ship jobs and their profits offshore. It’s time to reinvest in California, reward local actors with these incentives and reinvest in #OurCalifornia to create jobs here. True leadership and socioeconomic reform will lead us to better;

When big corporations use tax havens to dodge paying their fair share of taxes, #OurCalifornia picks up the tab. We pay higher taxes and are left with a larger deficit or fewer social services. Tax dodging by large corporations further harms our small businesses that play by the rules and pay their taxes.

It’s time we level the playing field and hold large Corporations, and the Rich who own them accountable.

End Deferrals
End California State Subsidies to any Corporation operating in California that
End Corporate tax haven loopholes used:
- To shift Federal and State profits to tax havens through subsidiary offshores;
- To sell the right to patents and licenses at low price to subsidiary offshores, which then “license” back to the US/Californian parent company at a steep price for the right to sell products here – a Large Corporate goal of transfer pricing and active finance exceptions;
- To buy a foreign firm and then claim that the new, merged company is also foreign. Inversion (a tactic often used by Apple, Amazon, etc.) allows them to pay almost nothing in taxes in any country around the world;
Utilize the Office of the Attorney General to investigate and apply economic sanctions to any Corporation operating in the State of California that has or continues to avoid paying their full State Tax Percentage which can include but are not limited to asset forfeiture

Part 3: End State Subsidies Immediately to any Corporation that has significant California Labor violations, Class Action Suits, or Outstanding andUnresolved Labor Infractions

When we say we value workers, we support workers and the labor movement, and we are working to strengthen #OurCalifornia during this pandemic and long after – we cannot continue to provide subsidies to abusive and reckless employers.

I will end subsidies (#OurCalifornia tax dollars) to corporations that have significant CA labor violations, OSHA violations, class action suits or substantial outstanding and unresolved labor infractions. Supporting workers, essential or otherwise, means we hold employers accountable for their actions – not rewarding them with Californians hard earned tax dollars to continue to abuse workers or the system created to support them;
Expand financial support for California’s Department of Labor and Attorney General Office to promptly investigate and respond to complaints involving labor and OSHA violations including but not limited to wage theft, safe & healthy working conditions, the right to organize, et. al;
- Apply economic sanctions appropriate for the severity and of the abuses of Workers with outcomes including but not limited to Worker damages, State fines, asset forfeitures;
It’s time to reinvest in California and invest in #OurCalifornia by supporting workers, the labor movement and employers who abide by the rules to create and promote safe and healthy work environments;
Incentivize Corporations who abide by the rules with favorable tax incentives and initiatives;

By holding Corporations accountable to their Workers and the State of California – we all win. It’s time to reinvest in California’s economy and in #OurCalifornia by supporting workers, the labor movement and employers who abide by the rules to create and promote safe and healthy work environments.

Part 4: #OurCalifornia Individual Tax Reform

I can’t make paying taxes pleasant, but the very least the State can do is make it simpler, equitable and adhere to our tax foundation’s core principle – the ability to pay.

In creating the Tax Fairness Commission I will tighten State tax code and legislation to provide sweeping tax reform to End Poverty in California and create resilient and self-sustaining communities and localities for #OurCalifornia. I will ensure the Wealthy and Large Corporations they own pay their fair share; simplify filing procedures by reducing State bureaucracy and wasted taxpayer time; and reduce taxes owed by both small businesses and individuals earning under specific economic thresholds.

As you Governor I will implement the following legislation for #OurCalifornia’s Individual Tax Reform:

No increase in State Personal Income Taxes for any Californian with an annual income under $350,000
- All Californians individually making $20,000 – $49,999 per year individually, or $40,000 – $99,999 per couple, will receive an additional State obligatory minimum tax refund of 25% of their earned income.
- And all Californians making $50,000 – $75,000 per year individually, or $100,000 – 150,000 per couple, will receive an additional State obligatory minimum tax refund of 15% of their earned income.
Create and implement temporary income tax code applied to annual income tax brackets of $350,000, $500,000, $1,000,000+
Create and Implement a Wealth Tax on California’s Top 4% to ensure our Billionaires and Millionaires (1,580,400 of 39.51 million Californians) pay their fair share
- A modest 3% wealth tax from those 165 Californians alone would provide the State and #OurCalifornia, $21.711billion for desperately needed public services and programs;
Simplify State Tax Filings to a Postcard. Utilizing a precision withholding system successfully used in other countries, individual filers would receive a postcard summarizing their withholdings and taxes due. Overpayments will be automatically directly deposited, and amounts due can be automatically withdrawn or scheduled from bank accounts. #OurCalifornia deserves to spend less time worrying about unnecessarily complex and stressful paperwork – so we can all get back to literally anything else.
- Work with the Federal IRS & California Franchise Tax Board to streamline current processes to ensure that we all are paying what we can afford to pay for the resilience of our communities and ending California’s top 4% legal and illegal tax evasion practices by reducing loopholes, improving State revenue and significantly strengthening State sanctions for ALL bad actors.
- Given the State’s access to employer W-2s, W-9s, Form 1099s, Recorded Capital Gains and Losses, the State will streamline current processes with employers, investments, and wealth accruals to compute and print:
  - how much each taxpayer earned in the previous year,
  - how much State tax was withheld
  - how much will be refunded or is additionally owed
  - If a Californian agrees with the postcard totals – no additional filing is necessary.
- If a Californian disagrees with the totals, they may go directly into their local IRS office to personally correct the issue, or submit initial disputes/corrections online via CA State IRS Tax portal secured with Blockchain.

Part 5: #OurCalifornia Small Business Tax Reform

Small businesses make up 95% of all businesses within the State of California and employ almost 48% of the state’s workforce, and making sure small businesses can continue to play an essential role in #OurCalifornia’s regional economies and industry sectors are essential for all our benefit. When small businesses can thrive, they’re capable of generating annual local payroll, community investment, and State exports.

That being said, the Tax Foundation ranks California as the 8th highest State with combined corporate income taxes in 2020. According to California Budget & Policy Center, the share of corporate income paid in State Taxes has declined by more than half when reviewing data from 1980 to 2017. Furthermore, Large Corporations paid no more than 4.2% of their California profits in corporate taxes for 2017. The burden and responsibility of business taxation has fallen on small businesses in California who do follow the law.

No more.

I believe that small businesses deserve additional support as California’s Large Corporations continue to evade taxation and their social responsibilities. I believe we should provide incentives to small businesses to reduce the emotional strain of our current economy, create initiatives to address small business disinvestment in our great State. Again, I can’t make paying taxes pleasant, but the very least the State can do is make it simpler, equitable and adhere to our tax foundation’s core principle – the ability to pay.

As you Governor I will implement the following legislation for #OurCalifornia’s Small Business Tax Reform:

Support small business in the State of California by reviewing and solidifying the Small Business Classification “Exemption List” for Large Corporate Exploitation and Evasion tactics. Remove Large Corporations who lobbied for small business classification and in turn are negatively impacting small business and #OurCalifornia;
No increase in State Business Income Taxes for any small business in California
- Keep a flat tax rate or Adopt a graduated income tax on Corporations which favors small business?
  - Drop from 8.84% to 7% for all California small businesses (gig economy Corporations are ineligible)?
  - OR Adopt a graduated income tax on Corporations?
- Would it be better to have a reduction for:
  - End the “CA double tax” for small businesses under a specific income threshold
  - self-employed income?
    - All self-employed small business owners in California with an annual personal income under $65,000 will receive an additional State obligatory minimum tax refund of 50% of their earned income
    - All small businesses owners in California with an annual personal income under $130,000 will receive an additional State obligatory minimum tax refund of 25% of their earned income.
    - Or end the State’s double taxation for small businesses at both the Corporate and personal income levels?
  - Special incentives for California Small Businesses, esp. micro businesses? (all gig economy Corporations are ineligible)
- Interdepartmental Collaboration with the State of California Small Business Crisis Assistance Department to assist with all current and future declared State of Emergencies:
  - Will provide material support for Small Businesses severely impacted by current COVID-19 and economic crises. Will use data to identify at-risk small businesses for future material support initiatives and needs;
  - Create pathways in each locality for small business feedback and supportive legislation;
  - Incentivize small businesses to remain in the State and revitalize localities in need;
  - Small Business Pandemic Response Initiatives available for safety compliance with COVID-19 or any other future pandemic the State of California faces;
- Expanding #OurCalifornia’s Capital Access Program for Small Business under the Public Bank of California;
- Simplify Small Business State Tax Filing to One Page with the precision withholding system and streamlining processes for small business owners. Time not spent on taxes can be time spent on their business, development and growth;

Part 6: Create a Public and Transparent TFC Impacted Parties Council which allows for feedback, representation, research and the opportunity to create legislation to better the lives and futures of #OurCalifornia;

TFC-funded #ChildcareForAll
TFC-funded #SNAPForAll
Empowering direct democracy within localities for TFC-funded Locality Infrastructure Revitalization Initiatives that Californians within individual localities need

In the true spirit of Upton Sinclair’s End Poverty in California campaign, I will call on fellow Citizens, Socialists, Governors, and fellow Socialist Gubernatorial campaigns across this country to adopt and implement the same.