California has completely overhauled its tax-related economic incentive laws by repealing nearly all existing incentives, and replacing them with a new sales tax benefit and limited income tax incentives, primarily for the manufacturing sector and for certain other businesses located in enterprise zones and other high-unemployment or high-poverty areas. In addition, the Governor’s office will have discretion to grant additional tax credits to other businesses; however, several of these new incentive provisions will require additional clarification.Over the past 20 or so years, the legislature and various governors enacted many tax incentives designed to stimulate employment or business growth in certain economically disadvantaged areas of the state, each of which was subject to numerous limitations, special definitions and exceptions.1 These include:an income tax credit for sales and use tax paid on purchases of certain types of machinery and equipment used within targeted tax areas as defined (Sections 17053.33, 23633);2an income tax credit for wages paid to newly hired employees by businesses in target areas if the new hires were unemployed, or members of the military, or qualified as low income under certain tests (17053.34, 23634);an income tax credit for sales or use tax paid on purchases of certain equipment for use in… Read full this story
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