Worldwide Income Is Basis of Unitary Tax

Under the unitary system, multinational corporations are taxed on the basis of their worldwide income, including earnings of all foreign subsidiaries, not only the business they conduct within California or the United States.

Simply put, if 10% of a given global corporation’s payroll, property and sales are within California, then the state charges its 9.6% corporate tax rate against 10% of the income of the entire corporation. That formula is used even if the California operation is a money loser.