California Tax-Sharing Transparency Bill Would Benefit Everyone

California residents should know how much of their tax dollars are going to big-box retailers, local businesses, and the consultants who broker revenue-sharing deals with cities. That’s why a bill moving through the state legislature is such welcome news.

The measure, A.B. 2854, focuses on the transparency of information that’s now accessible to the state, local districts, cities, and residents related to monies that are part of shared agreements between a few dozen California cities and either large retail chains or other businesses. The bill is now before the legislature’s Appropriations Committee.

These agreements send millions of dollars annually to some of the world’s largest retailers, including Apple Inc., Best Buy Co. Inc., and Walmart Inc. California cities would have to disclose how much sales tax revenue they give to the retailers, as well as how much the cities are receiving as a boon to themselves from these deals.

The funds used to broker these deals are considered public monies because, if they weren’t part of the deal, they could be used for public facilities, public roads, and so on. Local constituents and business owners are told where their taxes and the public funds are going. These transactions should be no different.

The funds that these cities are distributing and receiving affect not only that specific city, but also the localities and their constituents around that city. Neighboring towns and their businesses should know how many dollars and what related agreement terms are involved so they too can decide how to incentivize their city with local and national retailers.

One potential argument against A.B. 2854 is that information on tax-sharing agreements should be withheld from all individuals and businesses due to growing tension and resentment by cities and businesses that aren’t part of these deals.

But those individuals, localities, and businesses already know these agreements exist and that cities and retailers are getting exorbitant amounts of monies handed to them for these deals.

Showing the true nature of these agreements won’t deter any existing tension and resentment. Instead, it would allow uninvolved businesses or cities to determine how to best use a similar agreement and relationship to benefit themselves as well.

It is unreasonable to assume that individuals and businesses would be willing to accept limitations on accessing data related to public funds—not when those limitations could hinder possible attempts to improve their state, their localities, and their livelihoods.

These retailer tax-sharing agreements and their related data bring local windfalls by creating jobs and an influx of monies necessary to bettering the community and its individuals. Allowing the data from those agreement to become fully available and accessible is beneficial to all.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Lauren Suarez is an attorney at RJS Law with focus on federal and state tax controversy matters.

Allison Soares is a tax attorney at Vanst Law who focuses on audits, collections, appeals, international disclosures, and all other tax problems.

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