Save The California Enterprise Zone Programs
The State of California, in order to assist businesses in low economic performance areas, devised a series of tax incentives beginning in 1984. The program was put in place to assist certain depressed areas of the state to recover and grow through tax incentives to business owners and entrepreneurs. The California Enterprise Zone program legislation designated areas that would receive assistance through incentives to stimulate development. These Enterprise Zones have been expanded to give assistance to other areas of the state. There are now forty-two such zones across the state.
Several attempts to limit the California Enterprise Zone programs and cut back on tax credits have been defeated. In 2009, a State Assembly Committee responsible for Economic Development held several public hearings on the enterprise zone effect on the state economy. The opinion of the committee, as revealed in a letter to Assemblyman John Perez, was to maintain the CA enterprise zone legislation in its current form. The letter restated the importance of keeping these credits and incentives in the arsenal of state assistance California has to offer. Certain zones in the CA enterprise zone districts are set to expire over the next several years. The members argued that allowing such expirations would diminish the program and cause negative growth.
The purpose of the law is to entice businesses into locating and growing in California. Areas that have a California enterprise zone designation offer new and existing businesses tax breaks to locate or grow in one of the designated areas. These include a sales and use tax credit, a hiring tax credit and a deduction for certain business expenses. There is also a deduction for interest paid by the business and the ability to carry over net operating losses for a period of years. These credits and deductions allow businesses to reduce their tax burden. The goal of the incentive program is to have businesses located in the California Enterprise Zone program areas reinvest the money saved in taxes back into their businesses. This reinvestment in turn will, generate growth in the economy of California. Over the past sixteen years, there has been growth in these designated zones. This is clearly a program worth keeping.
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