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Posts Tagged ‘Enterprise Zones’

“Enterprise Zones Should Be Left Alone”

Thursday, May 19th, 2011 | Enterprise Zones, Tax News

From the Santa Clarita Signal:

Santa Clarita Valley officials said Wednesday that they’re skeptical of Gov. Jerry Brown’s latest budget proposals that plan to scale back a program that gives tax breaks to local businesses.

Brown proposed in January to do away with the Enterprise Zone program entirely to help balance California’s budget. But Brown eased the hard stance against the program thanks to an unexpected windfall of $6.3 billion in revenue for the state.

Throwing the Enterprise Zone program a lifeline is one of several maneuvers intended to sway four Republicans lawmakers. Brown is seeking a two-thirds majority vote in favor of placing a five-year extension on vehicle licence fees and sales taxes. The tax extensions would raise an estimated $10 billion to help close California’s ongoing budget deficit.

Assemblyman Cameron Smyth, R-Santa Clarita, said he would vote against the tax extensions.

While Brown has been proactive in reducing state spending, Republicans want Brown to reform the state’s pension system and place a cap on state spending, Smyth said. Enterprise zones, meanwhile, help attract firms to California, he said.

“The governor certainly wants to find Republican votes, but he’s going to have to do more than what’s come out of the May revisions,” Smyth said. “Enterprise zones should be left alone.”

May Budget Revision Significantly Reduces Credit to Businesses

Monday, May 16th, 2011 | Enterprise Zones, Tax News

 

The Governor’s May budget revision significantly reduces the credit available to businesses.    Essentially, the credit will be reduced to $5,000 per employee.  Below is the section that discusses Enterprise Zones.

Reform Enterprise Zones — The purpose of enterprise zones is to encourage economic activity for particular geographic regions. However, there are two significant failings in the way the current tax incentives are structured. First, the Enterprise Zone hiring credit encourages the hiring of employees. It does not encourage the creation of new jobs. A business that lays off five employees and hires one at $50,000 per year, gets the same credit as a business that expands its number of employees and hires an employee at $50,000 per year. In fact, if the employee in the first case meets one of the vouchering criteria — they live in the area — and the employee in the second case meets none of the vouchering criteria, the firm in the first case will receive a credit while the employer in the second case will not. Enterprise Zone programs should reward employers for creating new jobs. Second, employers can benefit from Enterprise Zone credits even when it is demonstrable that the existence of the credit had nothing to do with the fact that they have hired a new employee. This is evident by the existence of a phenomenon referred to as “retro-vouchering”. “Retro-vouchering” typically occurs when a private tax consultant makes contact with a business located in the zone and offers that business their services, on a contingency-fee basis, to determine if any of the employees hired by this firm within the last several years qualifies to be vouchered for the hiring credit. When this happens, clearly the hiring firm did not act based on the Enterprise Zone hiring credit as they were not even aware of the credit when they did the hiring.

Instead of repealing state tax benefits for Enterprise Zones, the May Revision proposes to reform Enterprise Zone hiring credits so that credits are only available to firms which actually increase their level of employment. Taxpayers would be eligible for a $5,000 credit for each incremental full-time equivalent employee that they hire. These credits would only be allowed if claimed on the taxpayer’s original return. Additionally, the May Revision proposal would not allow any new vouchers to be granted for tax years prior to 2011 when the application for that voucher was made more than 30 days after the date that the employee first begins employment. Additionally, to ensure that credits are creating incentives for relatively profitable, tax-paying businesses, the Enterprise Zone credits will be limited to a five-year carry-forward period.

Steinberg Responds to Five Point Plan

Thursday, May 12th, 2011 | Enterprise Zones, Tax News

The Democratic leadership responded to the Five Point Plan with this Letter.  Steinberg discusses the Enterprise Zone as follows:

You noted the need to fix redevelopment and enterprise zone programs, but you urge the Legislature to preserve their job generation capacity.  We agree.  We should point out, however, that both redevelopment and enterprise zone programs are major sources of the state’s fiscal problem (through additional state costs for schools and loss of state tax revenue).  Two respected non-partisan institutions, the Legislative Analyst and the Public Policy Institute of California, have raised serious questions about whether redevelopment and enterprise zones actually help with job creation and retention.

Business groups urge Jerry Brown, lawmakers to solve budget

Thursday, May 12th, 2011 | Enterprise Zones, Tax News

 

From the Sacramento Bee yesterday:

A business coalition pushed Wednesday for a grand state budget compromise that essentially merges Gov. Jerry Brown’s budget and GOPdemands for long-term pension and spending controls.The group of 12 — which dubs itself the Coalition for a California Financial Workout Plan — said voters should be allowed to decide on tax extensions as well as permanent fixes that address the “underlying conditions that got California in trouble.”

Members include the Silicon Valley Leadership Group, Los Angeles Chamber of Commerce, Bay Area Council and Sacramento Metro Chamber.

The coalition outlined a “Five-Point Plan” that includes tax extensions, a long-term spending control, reductions to public employee pensions, changes in the California Environmental Quality Act and a shift of responsibilities to local governments. The group also suggested that state leaders address abuses in redevelopment agencies and enterprise zones without eliminating them.

 Read the whole article here

California Legislators Travel To Texas for Some Job Creating Tips

Friday, April 15th, 2011 | Enterprise Zones, Tax News

 

One of the biggest disadvantages facing California employers is, not surprisingly, the unions.

One big finding: labor unions are more powerful in California.

“Andrew Puzder from Carl’s Jr. talked about how the 8-hour work day and the meal breaks (required in California) are harmful, especially for restaurant businesses,” said Assemblyman Dan Logue, R-Linda. “Because they may get a truckload of ….teenagers at 2:00 and he’s got to tell half of his staff to take a break while people line up out the door.”

 Read about the entire trip here.

Senator Bob Huff Still Backing Enterprise Zones

Thursday, April 14th, 2011 | Enterprise Zones, Tax News

 

This is from today’s Sacramento Bee:

Sen. Bob Huff, R-Diamond Bar, said that little has changed in the Senate Republicans’ position. They still want pension and spending cap changes. They still dislike Brown’s elimination of redevelopment agencies and enterprise zone tax credits, as well as his change to the corporate tax formula. Huff said Democrats would need to make concessions before any deal could be struck.

Read it here.

Brown Declares Budget Talks Dead

Tuesday, March 29th, 2011 | Enterprise Zones, Tax News

 

From the Sacramento Bee just now:

Gov. Jerry Brown announced this afternoon he has halted negotiations with legislative Republicans over a deal to place taxes on the ballot to help resolve California’s remaining $15.4 billion deficit.

“Yesterday, I stopped the discussions that I had been conducting with various members of the Republican party regarding our state’s massive deficit,” Brown said in a statement this afternoon. “The budget plan that I put forth is balanced between deep cuts and extensions of currently existing taxes and I believe it is in the best interest of California. Under our constitution, however, two Republicans from the Assembly and two from the Senate must agree before this matter can be put to the people.”

“Each and every Republican legislator I’ve spoken to believes that voters should not have this right to vote unless I agree to an ever changing list of collateral demands,” the Democratic governor added.

Senate Republicans on Friday released a list of major policy changes they wanted as a condition of voting for Brown’s budget proposals. The move was widely seen as disruptive to talks, but the governor had reached out to three Senate Republicans this weekend in hopes of salvaging a deal before deciding to call off talks.

One of the three, Sen. Anthony Cannella, R-Ceres, blamed trial lawyers, unions and “other stakeholders” for being unwilling to negotiate on pension cuts, a long-term cap on spending and regulatory changes.

“As a result of these groups’ refusal to challenge the status quo, it has become clear the governor and legislative Democrats are not in a position to work with us to pass the measures necessary to move California forward,” Cannella said in a statement. “Thus, I do not foresee a path to compromise.”

Brown did not specify what he would do next.

“Much is at stake, and in the coming weeks I will focus my efforts on speaking directly to Californians and coming up with honest and real solutions to our budget crisis,” he said.

Brown is considering alternative ways to put tax extensions on the ballot, either by a majority in the Legislature or by a ballot initiative. He suggested in his release that he may be skeptical of the majority-vote approach, saying the Constitution requires a two-thirds majority.

Republican Party Adopts Resolution Opposing Elimination of Enterprise Zone

Monday, March 21st, 2011 | Enterprise Zones, Tax News

 

As reported at www.jobsandsafecommunities.com:

California Republican Party Opposes Governor’s Proposal to Eliminate Enterprise Zones

Says Legislature should make job creation a top priority and abandon the governor’s ill-conceived attempt to raise taxes

(Sacramento, CA)—At the urging of Board of Equalization member George Runner, the California Republican Party this weekend passed a resolution in favor of the successful Enterprise Zone Tax Credit program.

The resolution, which received unanimous support from party members in committee on Saturday, states that Governor Brown has broken his promise to voters by attempting to eliminate one of the most successful job creation programs in California—Enterprise Zones.

“We should be looking for ways to expand this program, not eliminate it,” stated Board of Equalization member George Runner, who also authored the resolution and is a long-time Enterprise Zone supporter. “Enterprise Zones create jobs, employ our returning veterans and save taxpayers hundreds of millions of dollars each year. Brown’s proposal pushes our state closer to a permanent Welfare state by eliminating employer incentives to hire people who were previously struggling to find a job. Just a few short months after promising to create jobs in California, Governor Brown is trying to eliminate one of the most important job-creating program in our state.”

Governor Brown proposed to eliminate Enterprise Zones are part of his January budget proposal. The program’s elimination will not only jeopardize California’s fragile economic recovery, it will result in a significant tax increase on California businesses.

“The Republican Party is continuing to fight for California jobs, and the support for this resolution is another example of our commitment to economic recovery and fiscal solvency. I hope that the governor abandons this ill-fated endeavor and works with the Legislature on finding common sense solutions to our budget deficit,” concluded Runner.

The resolution reads as follows:

Resolution Opposing Governor Brown’s Ill-Conceived Attempt to Eliminate California’s Enterprise Zone Tax Credit Program

Submitted by the Honorable George Runner

For consideration at the Spring Convention of the California Republican Party

Sacramento, California

March 18-20, 2011

Whereas, California businesses are struggling with economic recovery, burdensome regulations and high state taxes in the midst of the national economic downturn keeping unemployment at record high levels.

Whereas, Governor Jerry Brown – elected in November 2010 – promised to spur job creation and make California business friendly now proposes to eliminate one of the most successful programs that actually has created jobs in more than 40 communities across the state: the Enterprise Zone Tax Credit Program. 

Whereas, California’s landmark Enterprise Zone Tax Credit Program is an economic driver that has been proven to create jobs, spur economic development and keep businesses open.

Whereas, in 2010 the program created or retained more than 118,000 jobs statewide while providing employment opportunities for more than 415 veterans returning home from serving our country.

Whereas, in 2010 the program saved California’s taxpayers an estimated $211 million by providing work instead of welfare and paychecks instead of unemployment benefits to more than 23,000 citizens.

Whereas, the California Enterprise Tax Credit Program and other proven job creators should be expanded, not eliminated.

THEREFORE BE IT RESOLVED BY THE CALIFORNIA REPUBLICAN PARTY that members of the Legislature vote to oppose the elimination of the California Enterprise Zone Tax Credit Program and look for further ways to expand tax credit programs to spur economic growth.

Assemblyman Don Wagner Strongly Supports Keeping Enterprise Zones

Monday, March 14th, 2011 | Enterprise Zones, Tax News

 

Today, Assemblyman Don Wagner came out in favor of maintaining the Enterprise Zone program – and he doesn’t have on in his district.

By repealing the tax credits that fuel enterprise zones, California’s many employers who took the state at its word, located and grew their businesses in such zones, and have helped improve some of our struggling communities will instead find their tax bills climbing dramatically. This will leave them with less in their budgets for payroll, benefits, capital improvements and hiring.

At a time when California has the nation’s second highest unemployment rate, we will see more people collecting unemployment insurance rather than paying taxes. Additionally, businesses that set up shop in enterprise zones, will suffer from decreased productivity or have to shut down, thereby further reducing state and local revenues.

Read the full article.

Small Business Leader Defends EZ

Monday, March 14th, 2011 | Enterprise Zones, Tax News

 

Bill LaMarr, executive director of the California Small Business Alliance, deftly responds to the Bee’s Board about teh EZ:

A March 8 editorial in The Bee (“Insiders vow lawsuits to save perks and pork”) called on businesses to drop our opposition to the proposed elimination of enterprise zones.

If someone tries to steal your property, you defend yourself and stop it.

The proposal to eliminate enterprise zones is like taking someone’s property and it’s illegal.

The state promised thousands of California companies that if they invested in enterprise zones they would receive tax credits. Eliminating them after businesses made those investments is a breach of contract. That’s why the state will be sued if it repeals enterprise zone tax credits.

But this is more than just a legal issue. Saving enterprise zones is essential to the state’s economic recovery. The program has created or saved more than 1 million jobs.

Read the full article here.

 
 
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