Tax Policy

Our Mission:

The Silicon Valley Leadership Group has a strong tradition of finding regional, state and federal bi-partisan policy solutions which recognize the innovation economy by bringing California and the U.S. tax codes up to date. Our top priorities are creating level playing fields on business sales and use as well as property tax rates and a tax code that is competitive globally and with other states.

2017-2019 Policy Priorities:

Business Tax Reform and Defending Against Onerous Tax Legislation and Ballot Measures

Oppose tax measures which disproportionately increase California business tax burden and jeopardize competitiveness.

  • Continue to track and monitor local, State and Federal policies that alter the business tax code.
  • Closely monitor and advocate against legislation/ballot measures which disproportionately increase California business tax burden and jeopardize competitiveness.
  • Defend against proposals compromising taxpayer confidentiality or requiring businesses to publically disclose proprietary business information.
  • Participate in at least three legislative meetings, such as the SVLG Washington DC Advocacy Day, and partnering at the federal level with ITIC, CompTIA, SIA, TechNet and other broad coalitions such as RATE, ACT and LIFT in advocacy efforts for a lower business tax rate, a competitive territorial tax system that does not discriminate against any industry or particular type of income – including income from intangible property.

Research and Development Tax Credits

Support solutions to expand R&D investments in California and enhance the Federal R&D Tax Credit.

  • Actively advocate in support of preserving and enhancing the Federal R&D Tax Credit through at least three meetings with federal legislators.
  • Develop a fact sheet illustrating and explaining how the R&D Tax Credit advances the State and U.S. economic competitiveness and job growth in Silicon Valley.
  • Participate in the SVLG Sacramento Advocacy Day to discuss with legislators reforms to the California R&D Tax Credit to increase its effectiveness and value to California companies and to streamline the calculation of the CA R&D tax credit by conforming it to federal rules.

 

Property Tax Valuation Fairness -Oppose Split Roll/Split Rate Property Taxation

Promote fair valuation tables, consistent and efficient audit processes and oppose any efforts to alter Proposition 13.

  • Participate in a meeting with Assessors to continue the current Proposition 13 treatment of business and residential properties and oppose legislation that would alter Proposition 13 and allow for the reassessment of business property.
  • Participate in at least two meetings with Assessors and/or the Board of Equalization regarding property valuation tables and consistent and efficient audit processes.
  • Work with the Silicon Valley Tax Directors Group, CalTax and other coalitions to oppose any changes to Proposition 13 including advocating to State Legislators should any proposed legislative changes be introduced.

Intangible Software Tax Fairness and Regulations and Reasonable Audits

Support reasonable, simple and fair application of state business taxes on tangible or intangible products and closely monitor alterations to regulations 1507 and 1502.

  • Participate in at least two meetings with Assessors establishing consistent valuations of new innovations and technology (e.g., embedded software, data centers), closely monitor and communicate discrepancies and/or trends with property tax assessments.
  • Closely monitor Technology Transfer Agreements for any refund claims, and regulation 1507 and 1502 impacts. Work with broader coalitions to develop simple and fair tax application of tangible or intangible products.
  • Hold a meeting with at least one member of the Board of Equalization to advocate for the development of reasonable valuations and audit manual guidance for business taxpayers.

Silicon Valley Leadership Group’s Tax Principal Criteria

In evaluating local and regional tax measures that come before the organization, the Leadership Group will use the following criteria:

  1. The measure should be for a fixed term and therefore include a built-in sunset.  (If the measure does not include a sunset, are the reasons for an on-going tax clearly defined?)
  2. Funds generated by the measure should be used for specific and identifiable purpose(s).
  3. A consistent dollar amount is applied equally to residential and commercial property.
  4. Measures should be capped at a certain level in consideration of large businesses with many parcels (contiguous parcels for the same business)
  5. The measure should contain a provision for a citizens’ oversight committee.

Comprehensive Business Tax Reform

Silicon Valley is a major driver of the U.S. economy through using innovation to create direct and indirect U.S. jobs.  Silicon Valley’s success helps grow our nation’s economic success.  Addressing business tax reform will ensure our continued economic growth and is a defining factor in determining where America’s leading global companies decide to locate and grow jobs.

As technology and our economy changes, our tax code must follow suit.  Many prominent U.S. based businesses, such as Apple, Google, Facebook, Tesla, and many others, did not exist when our tax code was last rewritten in 1986.  Updating the tax code, in a smart and effective manner, will make substantial progress towards reclaiming America’s global economic leadership.

An upgraded tax code, with lower rates and an enhanced Research and Development Tax Credit, are key factors to leading economic growth. As tax reform is considered, the fair application of competitive business tax rates is critical for spurring domestic business investment and job creation regardless of the structure of the business.  The U.S. needs a modernized tax structure that will help America’s global businesses create jobs and grow the nation’s innovation economy. Silicon Valley competes in a worldwide marketplace.  It is time America had a world-class tax system to stimulate new jobs and new industries across the U.S.

Tax Principles for Federal Tax Reform

The Silicon Valley Leadership Group has a legacy of advocating for responsible tax reform and continues to hold this position. Reforming the tax code will spark economic growth by allowing U.S. companies to compete fairly in the international marketplace, increase innovation and invest in American jobs.

The Silicon Valley Leadership Group supports the following tax principles:

  • Lowering Taxes. We support lowering the United States corporate tax rate.

The United States corporate tax rate is out-of-date, uncompetitive, and inhibits American companies from competing in both the international and innovation economies. While foreign companies have benefited from lower foreign tax rates, U.S. companies are subject to a tax rate of 35%, which is the highest among OECD countries, where the average is 25%. For the U.S. economy to grow, the corporate tax rate must be reduced.

  • Enact a Territorial Tax System. We support a territorial international tax system.

Currently, the United States is one of a small handful of developed countries that taxes corporate earnings on a global basis, which means that a U.S. company’s foreign earnings are subject to U.S. taxation, despite the fact that those earnings have already been taxed overseas. This double taxation, combined with a high corporate rate, dissuades many companies from investing foreign earnings in the United States. As a result, we lose the opportunity to create jobs and boost our economy. A territorial international tax system, combined with a lower rate, would remove the legal barriers that prevent foreign earnings from being used for domestic investment without penalty.
Facilitate Cross Border Trade. Any comprehensive tax reform plan should make it easier for companies to conduct business globally. We do not support a Border Adjustment Tax or erection of other barriers to cross border trade.

  • Empowering Repatriation. We support reducing the tax rate for repatriated earnings.

U.S. based companies have foreign earnings that are trapped overseas due to high cost barriers established by the United States tax code. Lowering the repatriation tax enables U.S. companies to bring those profits back and allows international earnings to be invested in America. The current high tax rate has led to practices such as earning stripping and inversions, and creates disincentives to invest foreign earnings in America.

  • Igniting Innovation. We support tax policies that promote research and development such as a lower tax rate for income derived from intangibles and intellectual property.

For the United States to continue to be the most innovative nation in the world, the federal government must support businesses in carrying out effective research and development work, patenting new inventions, increasing their intellectual property footprint, and maintaining a competitive edge against foreign innovators.

  • Research and Development. We support the Research and Development Tax Credit and ensuring its vitality through increasing the Alternative Simplified Credit to match the Regular Research Credit, keeping the credit permanent and expanding the rate of the credit.

 

Tax Policy Resources:

U.S. Congressional Committees

California Government Tax/Organization Contacts

County Assessor Offices for the Silicon Valley Region

Tax Policy Committee Staff:

Charles Melton
Director of Government Relations and Tax Policy
cmelton@svlg.org │ 408.501.7881