Brown Urges South Africa Measure in Unitary Bill

Assembly Speaker Willie Brown made personal appeals to fellow Democrats in a dramatic 11th-hour effort Friday to include anti-South Africa apartheid protest legislation in a deadlocked bill that would grant multinational corporations a $250-million tax break.

In intense behind-the-scenes lobbying, the San Francisco Democrat took his most active role yet in attempting to revive the two issues that many in the Legislature considered dead, at least for this year.

“He’s impassioned on the issue of South Africa,” said Assemblyman Tom Hayden (D-Santa Monica), a strong foe of the tax bill but one who said he was rethinking his position because of the moral arguments made by Brown, a black.

Hayden quoted Brown as telling him: “You’ve got to be with me on this because dealing a blow against racism in South Africa is more important to me than losing some money to big corporations.”

Overhauling Tax System

The legislation would overhaul the state’s unitary tax system and was sought by foreign-based multinational corporations. It would provide annual tax breaks of about $250 million to some of the world’s largest businesses.

The unitary tax relief bill failed in the Assembly Ways and Means Committee on Thursday night at the hands of angry Democrats shortly after Gov. George Deukmejian sent word that he would veto a bill that would prohibit state pension fund investments in companies that do business in South Africa or with the white minority government of Pretoria.

Democrats had said they would send the tax bill to Deukmejian if the governor agreed to sign the anti-apartheid measure.

The Speaker made an emotional speech denouncing South African apartheid during a closed-door party caucus Friday night, swaying some Democrats to support the tax break legislation for multinational corporations if it also included an anti-apartheid provision, several sources said.

Strong Opposition

However, late into the night as scheduled adjournment of the Legislature approached, he ran into strong opposition from Democrats in the Senate who opposed linking South Africa protest legislation to the tax bill.

Sen. Alfred E. Alquist (D-San Jose) said the legislation Brown was pushing “went too far,” and led Democrats in the Senate in resisting efforts by the Speaker to amend an anti-apartheid provision into the tax measure and bring the issue up for a floor vote.

Alquist, however, said “It’s still alive, somewhat feebly at the present time. We are negotiating.”

Assemblyman Sam Farr (D-Carmel), author of a unitary bill in the Assembly, said he hoped to convene a two-house conference committee that could fashion some sort of compromise.

Initially it was Assembly Democrats who bottled up a Senate-passed unitary tax bill.

Strong Differences

Farr said the biggest problems in bringing negotiators together were strong differences over the best approach to take to protest South Africa’s white minority policy of apartheid.

With time running out on passage of corporate tax break legislation, proponents of unitary tax relief vowed Friday to bring the issue up again in 1986 if efforts at a compromise failed.

“Each year we get a little bit more of a consensus, and I presume that we’ll just build from what we’ve established this year,” said Farr.

Developments were similar to the situation last year, when a unitary bill went down to defeat on the last day of the session.

Perennial Problem

The unitary issue is perennially thorny for legislators, who off and on over the last seven years have wrestled with various bills seeking to change the decades-old method of taxing multinational corporations.

As it stands, multinational corporations pay a state tax on the basis of worldwide business operations.

Foreign-based firms have led the drive to overhaul the tax, claiming it is unfair for the state to use profits earned by subsidiaries outside the United States for inclusion in their California tax liability.

Strong opposition came from domestic corporations, especially the Silicon Valley high-technology companies, who said the proposed legislation was skewed in favor of their foreign competitors, particularly the Japanese.

But many legislators said they were persuaded to support the tax bill by assertions that the unitary system posed so many problems for the foreign firms that it was discouraging new investment in California. Several Japanese corporations cited the tax in announcing plant expansions in non-unitary states like Oregon and Washington, at the expense of California.

Sadami Wada, a vice president of Sony Corp. of America who has led the fight to overhaul unitary, called the tax “a very profound problem” for foreign-based corporations doing business in California.

“It must be resolved, if not this year, then sometime in the future,” Wada said.

Farr and others said that it may be more difficult to pass the tax-break legislation next year because of election-year politics. Deukmejian, who gave the tax legislation a strong push this year, is up for reelection, as are all 80-members of the Assembly and half the members of the Senate.

“Pressures are keener in an election year. Everybody is much more sensitive to opposition to legislation. It makes (legislators) much more cautious,” Farr said.