In fiscal year 2013-14, corporate income taxes contributed about 8 percent to California’s General Fund, or $8.5 billion, and were the third largest source of revenue. The first and second largest revenue sources were personal income taxes, at about 65 percent, or $66.2 billion, and sales and use taxes, at about 22 percent, or $22.2 billion, respectively.
The California State Auditor released its findings last week, in response to a request by the Joint Legislative Audit Committee (Committee) to assess the benefits and cost-effectiveness of certain corporate tax breaks. In its April 2016 Corporate Income Tax Expenditures (Report), the Auditor found that regular evaluation of corporate income tax expenditures would improve their efficiency and effectiveness. These tax expenditures, which are defined as tax benefits for qualifying corporations, consist of tax exemptions, deductions, credits, and exclusions, and cost the state more than $5 billion in forgone revenues for fiscal year 2012-13.