Corporations Find Ways Around Conflict of Interest Rules at CA Tax Board

The obscure yet powerful California Board of Equalization (BOE) is a petri dish for how companies skirt conflict of interest rules.

The nation's only elected tax board decides cases involving sales, property, or income taxes; and the agency collects dozens of taxes and fees, which generates nearly $60 billion in revenue. Because of their power, the Legislature passed a law that board members must recuse themselves or return contributions before voting on issues affecting companies that have given them $250 or more in the preceding 12 months. 

But political money is like water, it will always find its way to its target, whether that's contributing to a favored charity, bundling money that's not over the limit or funneling money through a political action committee, which has higher limits.  

Take board President Jerome Horton, for example. According to the Los Angeles Times, Horton, who achieved infamy for not voting on critical bills during his time in the Assembly, asked companies to contribute a combined $200,000 to a nonprofit called California Educational Solutions during his 2014 BOE reelection campaign, according to the state's Fair Political Practices Commission. Horton's wife was president and chief executive of the company until April 25, 2014. Since then, she has been a volunteer president emeritus, the LAT's wrote. 

Two days after California's elected tax board gave SpaceX exemptions worth millions of dollars last year, the Hawthorne rocket company donated $7,500, at the request of board President Jerome Horton, to a nonprofit group founded by his wife. 

In addition, last year, Horton, a Democrat, also received 45 campaign contributions of $249 each from workers at a tax consulting firm, and since first running for BOE office, has received $26,000 from the Taxpayers Political Action Committee (TaxPAC), a business group funded by utilities and other firms with business before the group , including AT&T and Southern California Edison, according to the Times. The political money generosity was bipartisan. Republican board member George Runner also received dozens of contributions under the limit from the same firm and took in $39,000 from TaxPAC. 

Maybe, the law needs to change. Political action committees should also be under that $250 rule. Board members should have to recuse themselves from voting on an issue of a company that gave money to a PAC that later gave to that member within that 12 months. Considering that in the early 2000s, then-Assemblyman Horton was found to be the legislator with the highest non-voting rate on failed bills, he should be used to not voting. 

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