March 25, 2026
Orange County Business Council (OCBC) opposes AB 1790 (Connolly), which would eliminate California’s water’s-edge election beginning in 2028 and require mandatory worldwide combined reporting for corporate taxpayers. OCBC is concerned that this proposal would significantly increase tax burdens on companies doing business in California while adding substantial complexity and uncertainty to the state’s tax system.
AB 1790 would expand the scope of taxable income to include global operations that may have limited or no direct connection to California activity. This shift could result in higher effective tax rates for multinational businesses, potentially discouraging companies from expanding operations, maintaining headquarters, or investing additional capital in the state. At a time when California is competing globally for business investment and job creation, policies that increase cost pressures and reduce predictability may weaken the state’s overall economic competitiveness.
In addition to increased tax exposure, AB 1790 would impose significant administrative and compliance burdens on businesses. Mandatory worldwide combined reporting requires corporations to consolidate financial data across multiple jurisdictions, each with differing accounting standards, currencies, and regulatory frameworks. This complexity increases the likelihood of disputes, audit challenges, and compliance costs, particularly for companies with extensive international operations.
OCBC is also concerned about the broader economic implications of this legislation, including potential impacts on foreign direct investment and California’s standing in the global marketplace. Policies that diverge significantly from widely used international tax approaches may create uncertainty for global firms evaluating where to invest and operate, ultimately affecting long-term economic growth and job creation in the region.
For these reasons, OCBC opposes AB 1790 and encourages policymakers to pursue tax policies that support a stable, competitive and investment-friendly business environment while maintaining California’s ability to attract and retain employers that contribute to the state’s economic success.
For questions, please email Amanda Walsh, Vice President of Government Affairs.
