Paramount is threatening to leave California if it cannot reach a deal with Attorney General Rob Bonta to allow it to acquire Warner Bros. Discovery.
Puck reported the threat on Tuesday, following a similar report in Semafor last month, and adding that Paramount CEO David Ellison believes the move would save the company $500 million a year in taxes. The figure is meant to make the play both more credible and more threatening, quantifying both what Paramount stands to gain and what California stands to lose.
But moving out of California would not reduce the company’s tax bill by anything close to that, according to experts and financial statements. For one thing, the company’s state tax liability is far closer to zero than to half a billion dollars. And for another, relocating its headquarters wouldn’t actually change its tax bill.
“The effect on corporation tax is going to be pretty minimal,” said Rowan Isaaks, an economist with the California Legislative Analyst’s Office, a nonpartisan advisory body. “The location of your employees does not factor into how we calculate corporation tax liability. So even if they did move most of their jobs somewhere else, it wouldn’t affect corporation tax.”
