Assemblyman Allan R. Mansoor’s piece in the Orange County Register, Axing E-Zone tax credits a contract breach, highlights that the Governor’s proposed “reforms” of the Enterprise Zone Program “are just another billion-dollar tax increase on businesses.” He continues to explain that, “higher taxes cause businesses to leave California, taking jobs with them… If we eliminate these tax credits, we may be jeopardizing the long-term viability of businesses that depended on these incentives when they decided to locate in an Enterprise Zone.”
Additionally, the opinion editorial reminds readers “the Legislative Analyst’s Office articulated that retroactively taking tax credits already earned will have a chilling effect on business investment in California. A proposal that artificially limits a business’ ability to use the promised tax incentives for locating in an economically challenged community in the state is inconceivable at this time.”
Moreover, Mansoor points out that the proposal “ignores the role of job retention as a major contributor to getting our economy back on track and expanding investing and jobs in hard hit areas of California. The enterprise zone program is specifically designed to provide incentives for retention, attraction and expansion. In areas with a net decrease of jobs, a job retained is as good as a job created.”
Similarly, an opinion editorial from Assemblyman Paul Cook, Enterprise Zones Equal Area Jobs, also highlights that the Governor’s proposal “will result in lost job opportunities for the people who need the program most.” He continues to note “Enterprise Zones serve economically distressed areas by providing lower levels of taxation for businesses, stimulating investment and job creation.”
Senate Republican Leader Bob Dutton also voiced his support of the Enterprise Zone program saying that “enterprise zones are proven job creators, help small businesses expand and save the state’s general fund millions of dollars each year,” in an article titled Enterprise zones work; don’t mess with them.
The opinion piece continues to highlight that “enterprise zones empower people by giving them a private-sector job, taking them off taxpayer-funded services and giving them long-term job stability…[and] by getting people back to work and off unemployment and food stamps, the enterprise-zone program actually saves the state more than $120 million each year.”
California’s Enterprise Zone Program is one of the State’s most effective efforts to create jobs and reduce poverty. Undermining the program would be devastating to the very communities it was designed to benefit.
Weakening the Enterprise Zone Program will harm the very communities that are hurting the most in this recession and would amount to an increased tax on businesses. Both the original attempt to repeal the tax credits and the current proposal to gut it are illegal because it would violate the Due Process and Contracts clauses of the United States Constitution.