California currently has tax credits available to employers who are located in or hire employees from enterprise zones. An enterprise zone is a designated area that has been defined as economically depressed. Enterprise zones were designed to stimulate growth, development, and investment in those areas.
There are five tax incentives available to taxpayers that invest in or operate a trade or business located within an Enterprise Zone. The tax incentives are the:
• Hiring credit.
• Sales or use tax credit.
• Business expense deduction.
• Net interest deduction.
• Net operating loss (NOL) deduction.
Governor Jerry Brown proposed a revamping of the program through AB 93 which has passed the Assembly and has gone to the Senate for a vote. This bill would all but remove the $750 million a year zones and replace them with broader, state-wide business incentives. Governor Brown calls the current enterprise zones “wasteful” and “inefficient.” Those who currently receive the benefits are vowing to fight the bill.
Proponents of the zones say they are fulfilling the program’s promise of persuading companies to invest in hard-to-hire workers, including the chronically unemployed, veterans and ex-convicts. Opponents of the Enterprise Zones state that jobs haven’t been created because of the tax credits, and that only a few areas benefit from them. Governor Brown’s proposal would redirect existing economic development funds, spending $400 million on a sales tax credit to boost manufacturing and bio-tech research and development, $200 million on updated enterprise zones that provide incentives for hiring the poor and unemployed, and as much as $100 million to reward specific businesses that relocate to California.
So what do you think should happen? Do you think the Enterprise Zones create jobs and should remain to help distressed areas? Or do you think they whole state should have the opportunity to benefit through new incentives aimed at all employers? I’d love to hear your feedback.
Candy
