This week the Governor came out with his May Revision to the budget. One issue that many small businesses have been watching is the fate of the Enterprise Zone[EZ] program. In his May Revise he took away $700 from the EZ and redirected the funding to
Sales Tax The existing sales tax credit for businesses located in the EZ will be expanded to a statewide sales tax exemption on manufacturing equipment or research and development equipment purchases by firms engaged in manufacturing or biotechnology research and development. The cost of this is $400 million
Hiring Credit A hiring credit for businesses located in census tracts with the 25% percent highest share of both unemployment and poverty in the state. This will include some areas inside and outside EZ. The credit will only be allowed to taxpayers who have a net increase in jobs. 25% of these funds are allocated to small business. The cost is $100 million
Investment Incentive. This is called the California Competes Credit and will be administered by GO-Biz. Businesses will have to compete for this tax credit and will be determined by an impartial committee. 25% of these credits are designated for small business. The cost is $100 to $200 million.
Current EZ Zones. Taxpayer will be allowed to continue using EZ carryover credits for 5 years and will be able to continue to earn hiring credits for employees hired prior to Jan 1 2014.
What do you think? If you want additional information and a side by side comparison of the current EZ program and the Governors proposal please let me know.
Small Business California
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San Francisco, CA 94116