Report Criticizes California's Response To Underground Economy
California loses up to $10 billion in tax revenues every year to the underground economy – and a new report blames the state’s underfunded, dysfunctional enforcement efforts as well as its weak penalties.
The underground economy flourishes in labor-intensive, blue collar industries like car washes, janitorial companies and garment manufacturers. Businesses cheat by dodging tax payments, avoiding workers’ compensation and underpaying employees.
The Little Hoover Commission, an independent state oversight agency, released the report. Executive Director Carole D'Elia says for many businesses, the benefits of cheating outweigh the risks.
“In the unlikely event you might get caught, you probably won’t go to court. If you do, you might get a fine or a penalty. By then, you’ve probably hidden your assets. And then you typically just set up shop down the street under a new umbrella and start all over again,” D'Elia says.
The commission recommends the governor appoint a short-term leader to reorganize the “chaotic jumble” of state efforts to deal with the underground economy.
Other recommendations include making sure money for enforcement efforts is properly spent; tougher penalties and asset seizure laws; and a central database for sharing tax and business information.
"Bloody Sunday" Remembered By California Senate
California lawmakers are joining national officials in marking the 50th anniversary of the “Bloody Sunday” march in Selma, Alabama.
The state Senate unanimously approved a resolution that commemorates “Bloody Sunday” and the passage of the Voting Rights Act of 1965.
Some lawmakers say the message of Selma still resonates today.
“I’m gonna continue to stand – and I hope you will as well – in defense of, and in stark contrast to those who suggest that poor people – communities of color – are less than or less worthy of all that this great state has to offer,” says state Sen. Holly Mitchell (D-Los Angeles).
The California Assembly is expected to take up a similar resolution on Thursday.