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CalTax: Repeal of Enterprise Zone Tax Credits Is Illegal

From the CalTaxLetter:

A 26-page white paper on Governor Jerry Brown’s proposal to eliminate enterprise zones finds that the plan is “more than just poor public policy,” because it crosses the line into an “illegal state action.”

The document, written by Don Griswold, Brian Toman, Marty Dakessian, Rob Weyman and Mike Shaikh of Reed Smith LLP, states that repealing earned tax credits that have not yet been used would violate the Contracts Clause and Due Process Clause of the U.S. and California Constitutions. Additionally, the analysis states that the governor’s proposal is “vulnerable to challenge on various non-Constitutional grounds and would give rise to various causes of action including breach of contract, promissory estoppel, declaratory relief, intentional interference with contractual relations, and intentional interference with prospective economic advantage.”

Governor Brown’s proposal is “just as impermissible as it is imprudent,” the analysis concludes.

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