Will California’s Business Tax Incentive Program End?

A San Diego business litigation attorney at Gehres Law Group, P.C. can provide assistance to companies in understanding their rights and obligations under current laws in California and can help companies navigate the court system to enforce their rights. San Diego Business Litigation Attorney

The law regularly evolves in California, and companies should ensure they have an experienced, knowledgeable legal professional to assist them in operating within the current regulatory framework.

One potential change companies may need to address in the future, for example, is the end of California’s business tax incentive program.

Will California’s Business Tax Incentive Program End?

For four years, California has had a program in place called California Competes. The program’s purpose is to incentivize business organizations to move to the state or to remain within the state. The program works by providing tax credits to eligible organizations. It has been a very expensive program, awarding companies with close to $800 million in tax credits.

However, the Los Angeles Times indicates that the future of the program is in question. The program was scheduled to end next year and the nonpartisan Legislative Analyst’s Office has now released a new report indicating that the program should not be continued. The report from the Analyst’s office suggests that the state should instead provide broad-based tax relief instead of giving specific tax incentives to businesses that participate in this program.

The legislative analysis determined that in excess of one-third of the total credits that were made available through the California Competes Program did not produce any demonstrable change to the overall economic conditions of the state, and thus continuing the tax credits could not be justified by providing value to the state’s economy. The analysis also determined that awarding the substantial tax credits created a competitive disadvantage for existing businesses within the state of California who were not eligible for the tax relief that California Competes provides.

The Legislative Analyst’s office was not able to assess the value of the remaining nearly 2/3 of the tax credits that were awarded as part of California Competes because the analysts were unable to make a determination regarding how the businesses who received the credits would have reacted if they had not received the tax breaks.

The Legislative Analyst’s office was able to use the data they collected to make a recommendation regarding California Competes overall though. They indicated that the program should be allowed to end in 2018 on its scheduled expiration data. The office suggested that instead of continuing the program, the state should consider lowering overall business taxes for all organizations. They also recommended that if lawmakers do intend to extend the existing California Competes program, they should narrow the program to focus more specifically on providing tax incentives to attract and retain high-value companies.

Getting Help from a San Diego Business Litigation Attorney

The San Diego business lawyers and business litigation attorneys at Gehres Law Group advise California companies on legal developments that affect their operations or their legal rights, and represent small to medium-sized businesses and their owners in utilizing the state and federal justice systems to advance and protect client interests.

To find out more about how Gehres Law Group, P.C. can assist you with understanding California’s current laws and with asserting your company’s rights in court, give us a call at 858-964-2314 or contact us online today.

By | 2018-01-22T12:54:45-08:00 January 16th, 2018|Taxes|Comments Off on Will California’s Business Tax Incentive Program End?