California Democrats want to raise taxes on corporations to pay for homeless programs

California Democrats on Wednesday unveiled legislation to increase tax rates on larger corporations in order to establish a permanent funding stream for solutions to the state’s homelessness crisis.

Assembly Bill 71 would increase tax rates on multinational corporations worth more than $5 million, from 8.84% to at least 9.6%, a rate from 1986. The proposal, Democrats said during a press conference, would raise up to $2.4 billion annually for homeless programs.

The money would help support nonprofit organizations and create more affordable housing, according to the coalition sponsoring the bill, which includes city leaders and advocacy groups.

The legislation would also require a “gaps and needs analysis,” said Assemblyman David Chiu, D-San Francisco, to ensure every dollar is “is spent, and spent wisely.”

“This measure is not just about money,” Chiu, a co-author of the bill, said. “It’s about strategy. It’s about a roadmap. It’s about how to address homelessness in a meaningful way.”

Gov. Gavin Newsom proposed in his January budget funneling $1.75 billion in one-time funding toward buying hotel and motel rooms for the homeless, with a specific emphasis on mental health housing and sheltering older Californians.

“Let’s use this money to make that investment,” Newsom said during a Friday conference.

But state budget in recent years have continued upping funding to help cities and counties shelter and care for 151,000 homeless Californians, it’s usually a one-time allotment that leaves advocates wondering if more money will come the following year.

“While I appreciate the governor’s dedication of funding to homelessness,” Assemblyman Luz Rivas, D-Arleta, who is spearheading the measure, “it is not proposing ongoing funding. It’s just one-time allocation. That’s what this bill is attempting to accomplish.”

Democrats last year floated other proposals to raise taxes on California’s millionaires. Those plans failed to garner enough support for consideration before lawmakers concluded their 2020 legislative calendar.

Moderate Democrats have generally shied away from tax increase proposals, including on businesses. Voters also rejected a ballot measure this year that would have increased property taxes on some businesses to raise money for schools and communities.

Newsom has also rejected calls to increase taxes.

“They’re not part of the conversation,” he said Friday.

Yet Los Angeles Mayor Eric Garcetti rejected any idea that AB 71 would harm businesses, arguing that owners want nothing more than to decrease homeless encampments along their storefronts.

“As a mayor, we don’t want to do something that would chase business out of California,” he said. “This is thoughtfully done to see businesses thrive.”

The Legislature began its 2021 session on Jan. 11, and won’t likely consider the bill in committee until early spring.

This story was originally published January 14, 2021 at 5:25 AM with the headline "California Democrats want to raise taxes on corporations to pay for homeless programs."