In 1986, after years of lobbying by Multinational Corporations (MNCs) and pressure from Reagan’s admin, CA passed a law that allows MNCs to hide their profits in overseas tax shelters. 

The “Water’s Edge” policy allows MNCs to only pay state taxes on earnings they say are generated with the borders of the state, and not those generated over the “water’s edge” of California. This policy allows them to hide revenue and underreport in-state profits through subsidiary corporations and tax havens. 

It is the largest corporate tax break in CA, and cost the state $4.1b in 2024-25. 

AB 1790 (Connolly) would return CA’s corporate tax system to the previous worldwide combined reporting, remove the loophole, and get MNCs to pay their fair share, returning $3-4b annually to CA. That money could go to critically underfunded services and programs such as climate, public health, and more.

On April 27th, AB 1790 passed through its committee and will next be going to Asm. Appropriations Committee.

Send a letter to the Assembly Appropriations Committee using Fossil Free California’s tool here:

Are you a constituent of Assemblymember Appropriations Chair Buffy Wicks?

Call her office at (916) 319-2014 and ask her to support this critical bill.

Sample script: “Hi, my name is ____, I live in [city] and I am a constituent of Assemblymember Wicks. I am calling to urge her to vote YES on AB 1790, Ending the Water’s Edge Tax Loophole, when it comes for a vote in Appropriations. This bill is important because [it makes major companies pay their fair share/it would provide funding for important programs/it closes a ridiculous loophole/it would help solve CA’s budget crisis/etc]. Thank you and please vote YES on AB 1790.