The announcement of A.B. 1121 comes a few weeks after State Treasurer Phil Angelides asked two state pension funds to pull their money out of offshore tax-fleeing corporations.
Democratic Assemblyman Dennis Cardoza’s bill is modeled after a similar proposal recently passed by the US House Appropriations Committee.
The new proposal is aimed at firms:
- that incorporate in another country if they don’t have substantial commerce in that nation
- that have publicly traded stock
- that have the US as their principal market.
The California legislation would apply to offshore incorporations up to 10 years before the bill’s effective date. It would start with tax years beginning January 1, 2004.
Angelides threw down the gauntlet July 25 when he said the treasurer’s office wouldn’t do business with public US companies that flee US taxes by moving to another country.
He said his office won’t invest the state’s $45 billion Pooled Money Investment Account in such companies nor will the many state boards and commissions chaired by the treasurer.
In addition, he asked the California Public Employees’ Retirement System and the California Teachers’ Retirement System to end their investments in offshore companies.
Angelides sits on the boards of directors of the two systems, which together hold $752 million in investments in publicly held US companies that have expatriated. (See Cal. Treasurer Targets Firms Heading Offshore .)
Read more about changes going on at CalPERS at
Seismic Shifts Ahead