2007 Silicon Valley Projections - Silicon Valley Leadership Group

Tax Policy
Suggested Solutions/Conclusion
How can we strengthen our economic competitiveness, retain,
and grow facilities and jobs? California should continue to be
fiscally responsible, but also lower where possible overall tax
burdens and proactively address employers’ retention, expansion,
and growth needs (without unduly jeopardizing local
goods and services). Also, the following steps should receive
immediate attention:
• Eliminate double taxation by implementing a full sales tax
exemption for manufacturing equipment purchases;
Country
Corporate Tax Rate
India. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42%
Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41%
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40%
France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35%
United States . . . . . . . . . . . . . . . . . . . . . . . . . 35%
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33%
United Kingdom. . . . . . . . . . . . . . . . . . . . . . . 30%
Sweden . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28%
Czech Republic. . . . . . . . . . . . . . . . . . . . . . . . 24%
Russia. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24%
Singapore. . . . . . . . . . . . . . . . . . . . . . . . . . . . 20%
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . 16%
Ireland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13%
Puerto Rico. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7%
publicly funded program in health or human service—
such factors should take into account the experience of
companies utilizing the tax provision and also the secondary
and tertiary businesses supporting such companies,
such as a supplier, construction firms, transportation company,
etc.).
• Avoid disproportionate tax policies which unfairly place
burdens on employers and act as a disincentive that hinder
growth (for example, split roll property taxation is a separate
assessment value for business versus residential property
owners);
• Create simplicity and predictability in the tax system
• Enable and encourage online filing of assessments and
assessment appeals
• Update depreciation/valuation tables for business property
• Allow ex parte communication with the Board of
Equalization and the Franchise Tax Board and at all agency
levels of the state
Tax Rate by State
Source: Deloitte Consulting LLP
• Provide a more level playing field with other states by
adopting a more heavily weighted if not solely a sales
apportionment formula;
• Support state R&D tax policy enhancements (and also
encourage enhancement and making the federal R&D permanent);
• Employ “dynamic” rather than “static” economic modeling
when evaluating the anticipated revenue consequences of
proposed tax policy programs to more realistically gauge
the fiscal impacts and benefits to California’s economy and
competitiveness. This means not just looking at the forgone
tax revenues relating to the incentive for budgetary
purposes, but also looking at the return on investment
through new jobs created or retained (e.g., personal income
taxes, sales tax from increased consumption, employment
of targeted populations currently relying on some form of
Source: Deloitte Consulting LLP
50