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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.”
Paramount appears to be basing its estimate on the expectation of a generous incentive package from whatever state it moves to. It may also be factoring in the proceeds from the potential sale of the Paramount lot, which is likely worth a few billion dollars, as well as lower overhead if it relocates to a state with a substantially lower cost of living.
But those potential savings have nothing to do with California tax policy, and would not represent a loss to the state’s coffers. To the extent that jobs leave the state, the state would lose personal income tax from those employees, but Paramount would likely have to retain a substantial workforce in the state to continue to do business in the film and TV industry.
California is often tagged as a hostile to business due to high taxes and regulations. Other companies, including Tesla and Oracle, have contributed to the narrative by relocating their headquarters elsewhere.
But state corporation taxes are apportioned based on where customers are located, not on where the company is based, as Isaaks explained in a report published on Tuesday. California taxes the share of Paramount’s income that comes from California-based advertisers, distributors, Paramount+ subscribers, and so on. That share would not change even if the location of the headquarters changed.
“When I’ve done the analysis of the tax savings of moving out of California, for most companies that are not flow-through [i.e., not partnerships or LLCs], there really isn’t an income tax savings,” said Robert Johnson, a CPA who teaches state and local taxes at Cal State University Northridge. “California is market-based sourcing. Unless you’re going to get all your customers to move, you’re not going to change how much gets sourced to California.”
Even more to the point, Paramount Skydance doesn’t pay anything like $500 million in state taxes to begin with. Public companies are not required to report how much they pay each state, but they do report their overall state and local tax liability.
And according to its most recent annual report, Paramount Skydance and its predecessor, Paramount Global, got a net tax benefit — not a bill — of $11 million from state and local governments in 2025. (The majority of its state and local tax effect came from six states: Pennsylvania, New York, California, New Jersey, Ohio, and Oregon.)
Like other states, California regularly provides Paramount and CBS with millions in tax credits to make films and TV shows in the state. Some studios have far more California credits than they can use because they do not owe enough taxes. Paramount was among the companies that persuaded the state to make film credits refundable starting last year.
Paramount does pay property tax on its studio lot. But the lot is currently appraised at $331 million — a bargain compared to its potential market value — which works out to an annual tax bill of about $6 million. If Paramount were to sell the lot, it would incur significant transfer taxes and capital gains taxes, likely dwarfing any property tax savings.
To the extent that Paramount employees move out of California to a lower-tax state, they would save on their personal income taxes, with the highest earners realizing the greatest savings. That wouldn’t help Paramount, but the company could save money by paying workers less in a state with a lower cost of living, which would also reduce its payroll tax bill, and by paying less for outside services.
A source familiar with Paramount’s analysis said that corporate taxes are not where it expects to reap the greatest savings. The company declined to comment.
