In California, Anti-Trump Resistance Takes on Taxes: New Bill Raises Billions by Closing a Big Loophole in Trump’s Corporate Tax Cuts Passed by Congress

Tuesday, March 6, 2018

Closure of the Carried Interest Loophole Would Raise $1 Billion Annually for California

SACRAMENTO – Today, Assemblymember Mike A. Gipson (D-Carson) stood with the Hedge Clippers, Patriotic Millionaires, and Reclaim Our Schools LA at the State Capitol to launch AB 2731 – a state bill to close the carried interest tax loophole and raise an estimated $1 billion annually for public schools and civic priorities.

“California is a leader, we already tax carried interest as income here at the state level,” said Assemblymember Gipson. “Now, we are creating this surtax to fill the void that exists and collect from corporations who don’t pay to the federal government. AB 2731 is about tax fairness. California needs a growing economy that works for all, not just the wealthy few.”

Each year, over a billion in revenue is lost due to the lucrative and unfair carried interest loophole, which allows a small set of fund managers to lower their federal tax rates below those paid by regular working Americans. On the presidential campaign trail, Trump promised to close the carried interest loophole. But the Republican-led Congress left it wide open when they recently passed into law Trump’s corporate tax cuts and lavish giveaways to the richest Americans, instead of investing that money for public education.

"California has a chance to lead here. We have a chance to point to a step towards basic tax fairness. To show regular Californians that their government works for them, and not just for the wealthy few. But more importantly, we have a chance to show that we realize that the future of our economy is intrinsically linked to our focus on education" says Rich Boberg, Patriotic Millionaire.

“Public education is a human right guaranteed to all by the state constitution and we must fight now to reinvest and end the disparity in the unjust public school funding structure that currently exist, which puts California near the bottom in per student funding,” says Hilda Rodriguez-Guzman, parent leader with the community group ACCE.

Now, Assemblymember Gipson and a broad coalition of progressive groups are fighting back, taking action to deliver meaningful tax reform that actually benefits working people, not just the wealthy elite. AB 2731 will close the carried interest loophole and generate billions in new revenue forpublic schools while helping minimize the impact of looming federal budget cuts.  

California is the latest in a growing number of states to advance bills to close the carried interest loophole and take on Trump’s harmful tax agenda. Other states include: District of Columbia, New York, New Jersey, Connecticut, Rhode Island, Massachusetts, Maryland, Virginia, Illinois, and Minnesota.