California Oversight Committee Finds Tax Breaks Are Costing Billions

SACRAMENTO (KCBS)-The Senate Office of Oversight and Outcomes looked at 10 tax breaks enacted by the State Legislature and found they’ve been costing the state $6.3 billion over the past decade.

Tax breaks are usually implemented for businesses to grow and develop and for residents to buy homes, but the oversight committee found that the cost is way more than expected and most of the time their purpose was never stated.

KCBS’ Barbara Taylor Reports:

John Hill, the principle consultant who did the study, said no one paid attention to the runaway tax breaks, so they just keep on giving.

Years trickled on by and no one in Sacramento noticed that businesses and individuals were scooping up billions of dollars in unintended tax breaks. But rescinding them now could be difficult according to Hill.

“To revoke a tax break requires a two-thirds vote because it’s considered to be a tax increase. Some people refer to that as a one-way ratchet. It’s easier to get a tax break on the books than it is to take it off the books,” he said.

One of the biggest money drains is the research and development credit that cost the state almost a billion dollars more than expected last fiscal year.

Meanwhile a tax on corporations that was supposed to generate new income instead cost the state $230 million dollars in the last budget cycle.

(Copyright 2011 by CBS San Francisco. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

More from Barbara Taylor

More From CBS San Francisco

Get The New CBS SF Bay Area Local App
Got Our Weather App?

Listen Live