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Backers of a November initiative to raise taxes on out-of-state firms suggested Monday that the state stop doing business with four companies that officially opposed a similar tax change in the Capitol this year.

The Proposition 39 campaign has targeted Chrysler, General Motors, International Paper and Kimberly-Clark for opposing Assembly Bill 1500, which would require companies to base tax calculations solely on their proportion of sales in California.

The tax change would have the effect of hiking taxes by $1 billion for mostly non-California companies that currently use a different formula based on sales, property and payroll, according to the nonpartisan Legislative Analyst's Office.

AB 1500 would use the money to lower tuition costs at state universities. The same tax change is contained in Proposition 39, with half of the money initially going toward alternative energy projects and the other half going to the state general fund budget.

In a paper issued Monday, the Proposition 39 campaign said the four companies have received $42.4 million from contracts with the state since 2006, including $23 million in Chrysler vehicle sales. Campaign spokesman Chris Lehane said the state should consider ending contracts with the firms. The latest call comes after the Proposition 39 campaign threatened to attack the companies in a Bee advertisement unless they renounced their opposition to AB 1500.

"On one hand, they're reaching out with an open hand to take taxpayer dollars," Lehane said. "On the other hand, they're pickpocketing the taxpayers of California."

Peter DeMarco, spokesman for California Employers Against Higher Taxes, an anti-AB 1500 coalition that contains the four targeted firms, said it was "simply outrageous" for Proposition 39 backers to threaten companies that exercise their free speech rights.

"You're talking about employers who have a major, major presence in California," DeMarco said. "They have hundreds if not thousands of employees that collectively generate millions of dollars in revenue ... Cheap political stunts like today's are best reserved for Comedy Central, not as part of a meaningful dialogue into the issues facing California."

Proposition 39 is backed by Tom Steyer, a billionaire hedge fund manager based in San Francisco. He has donated $21.9 million toward the initiative.

But an attack campaign more than three months before the election suggests Steyer instead may be focused on getting a "single sales factor" tax change through the Capitol rather than on the ballot. Speaker John A. Pérez, D-Los Angeles, the author of AB 1500, will still attempt to get the necessary two-thirds legislative approval in the final month of session. Steyer's effort may be a means of pressuring business opponents to back off.

"Our perspective is the best thing for the state would be for AB 1500 to become law," Lehane said. "If AB 1500 indeed became law, our campaign would be over. Proposition 39 is out there in the event this doesn't happen."



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