State Sen. Cathleen Galgiani wants to bankroll more government services without raising taxes.
How she plans to do that is by supporting efforts to permanently establish the Tax Recovery and Criminal Enforcement (TRACE) Task Force as part of the state Department of Justice.
Since being established the task force has identified $46 million in state taxes not paid to the state on $210 million from the underground economy.
“It is estimated that the state loses $8.5 billion in corporate, personal and sales and use taxes each year as the result of the underground economy,” Galgiani said. “Needless to say, these are significant uncollected taxes that are desperately needed to fund basic government services —an amount relatively equivalent to the state’s rainy day fund. Not only does the task force go after uncollected taxes, they also investigate labor law violations, and protect law abiding business owners who are put at a competitive disadvantage. The TRACE TASK FORCE has been operating as a pilot program and has already recovered millions of dollars in lost tax revenue for the state.”
The legislation that gets its first hearing Wednesday before the Governance and Finance Committee would expand the current program to all major metropolitan regions of the state including offices in Fresno, San Diego, Sacramento, Los Angeles and the Bay Area. Participating agencies include the Department of Justice, the Department of Tax and Fee Administration, the Franchised Tax Board, and the Employment Development Department.
“Here in California, home to the world’s sixth-largest economy, every worker who powers this economic engine deserves rights at work, every upstanding business owner deserves a fair market, and every taxpayer deserves to see their hard-earned money used to fund vital services,” said Attorney General Becerra in a news release. “If you work hard and play by the rules, you should be able to get ahead. This legislation would provide the resources needed to enforce the law and protect the pocketbook of every hard working Californian.”
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