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New tax credits may benefit Lodi businesses

Credits are intended to replace enterprize zones, boost hiring and growth

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Posted: Wednesday, November 20, 2013 12:00 am

Lodi manufacturers and other businesses will be able to take advantage of two new state tax credit programs starting in July 2014 that are designed to foster economic development and job growth throughout California.

The tax credits — which include a sales and use tax exemption and a credit for hiring new employees — are designed to help replace the state’s enterprise zones, which will cease to exist at the end of the year. Lodi is in the San Joaquin County Enterprise Zone.

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Welcome to the discussion.

1 comment:

  • Connie Rill posted at 4:40 pm on Fri, Nov 22, 2013.

    mezzo Posts: 5

    As a business retention and outreach specialist for the county, I have looked over this incentive very carefully. The new hiring tax credit is only for manufacturers that hire within a very narrow subset of new hires and only for a net increase in new hires...replacing an employee will not count. Only workers that meet the narrow subset, i.e., felony convictions, persons on government subsidies such as food stamps and veterans recently released within the last 12 months or persons unemployed for the past year, will qualify. The credit is for 35% of wages paid over $12 per hour. If you pay $12.50, the credit will be based on the 50 cents per hour at 35%, multiplied over the number of hours worked. For instance, if a person works 2,000 hours per year, using the above parameters, the credit could be $350 (It was $12,400 under the Enterprise Zone). A business has to reserve a potential new hire credit with the FTB within 90 days of hire by filling out a reservation. Unless a company is growing, hires a lot of persons within the narrow subset and all at excess of $12 an hour, there is no real financial benefit to this incentive.
    Manufacturers will get to keep the state sales tax portion for manufacturing equipment, however, they used to get a tax credit for the entire amount of taxes paid, so this is not a better incentive compared to the previous Enterprise Zone sales tax credit. The state tax portion is 4.19% -- and a company has to apply to the Board of Equalization to get a waiver so they do not pay this tax to their equipment vendor.
    Anyone that believes Go-Biz will be providing incentives for a company to move to Lodi versus the L.A. or S.F. area, can still hope that Go-Biz will bestow special incentives, but I wouldn't hold your breath. But Lodi should be proactive if it wants any incentives from the Go-Biz organization, by lobbying to become a Pilot project so that the $12 an hour minimum for hiring credits can be lowered to $10 minimum. That would help make the incentive more of an incentive.



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