Fossil fuel companies are profiting off an obscure state tax break depriving California of up to $146 million of annual tax revenue that could be used to combat climate-change-fueled wildfires, according to a new report released amid an inferno tearing through Los Angeles. The tax break has persisted for decades in the Democrat-controlled state even as California has faced deficits and cuts to wildfire preparedness — including recent cuts to the Los Angeles Fire Department’s budget.
During the first night of the fires, firefighters struggled to obtain water from fire hydrants in Pacific Palisades, a neighborhood that had been set ablaze in western Los Angeles. A city council member who represents the Palisades neighborhood blamed the lack of water on “chronic underinvestment.”
The new report, released Wednesday by the Climate Center, a think tank focused on California climate solutions, details how oil and gas companies and their allies used campaign donations, lobbying dollars, and legal pressure to establish a tax loophole that allows corporations to reduce their taxable state income by avoiding reporting foreign profits and losses, if the company elects to do so.
This tax loophole, called the “water’s edge election,” is California’s largest business tax break. The loophole allows corporations to avoid paying more than $4.3 billion in state corporate tax revenue each year and specifically gives oil and gas companies upward of $146 million in annual tax breaks, researchers found.
In 2023, ExxonMobil, Chevron, and Shell made more than $83 billion in profits. In 2024, Chevron announced that it would be moving its headquarters out of California but will continue operating in the state. The oil company is also one of…
Auteur: Freddy Brewster
