Assemblyman Allan Mansoor published the following Op-Ed in the Orange County Register:
I was disappointed, to say the least, when Gov. Jerry Brown unveiled the May revision of his budget, but I wasn’t surprised. The governor’s updated budget proposal still calls for an increase in taxes at a time when Californians can least afford it. His so-called “reforms” of California’s Enterprise Zone are just another billion-dollar tax increase on businesses.
Californians are sick and tired of new taxes and budget gimmicks, and Brown’s proposal is just one more gimmick. What Californians need right now is an honest conversation about the real problems facing our state.
We are the highest taxed state in the union, and this has serious consequences. Higher taxes cause businesses to leave California, taking jobs with them. The governor’s “reform” of the Enterprise Zone program is nothing more than an unlawful, retroactive, billion-dollar tax increase.
California’s recovery and future success will depend on a society of productive workers, and the only thing higher taxes are good for is encouraging a welfare state. We should focus on providing tax relief for all businesses and individuals, especially those that create new jobs and encourage self-sufficiency.
Retroactively taxing businesses by limiting their ability to carry-over tax credits that accrue during years they are not profitable undermines our ambitions for self-sufficiency. Many businesses take years to become profitable and the expectation of these tax credits is a critical factor in their decision to locate in an Enterprise Zone. 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.
Think about that. These businesses took the government up on its offer of tax relief in exchange for investing resources to create jobs in California’s most economically challenged areas. Now Brown wants to go back on that promise and unlawfully raise their taxes? Brown’s suggested repeal of the Enterprise Zone program is a breach of the state’s contract with Enterprise Zone employers.
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.
Brown’s proposal also requires a net increase in jobs to claim the hiring credit. Superficially, this condition sounds noble, but realistically, it ignores the role of job retention as a major contributor to getting our economy back on track and expanding investment 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.
What the governor proposed represents a significant, retroactive tax increase on California employers and is just one more gimmick we can’t afford. Our long-term recovery still depends on jobs, and Enterprise Zones will help drive the recovery that will deliver California from its economic woes.