California Governor’s Budget Summary to Repeal Enterprise Zone Tax Benefits
proposed 2011-12 budget announced by new Gov. Jerry Brown to help solve the state’s
fiscal crisis could heavily impact all enterprise zone
(EZ) tax incentives. The
budget proposes to eliminate enterprise zone tax incentives and similar tax incentives
(Targeted Tax Areas, Manufacturing Enhancement Areas and Local Agency Military Base
Recovery Areas) for specific areas for tax years beginning on or after January 1,
2011. This proposed elimination of the tax incentives is expected to generate additional
revenues of $343 million in 2010‑11 and $581 million in 2011‑12.
Repeal Enterprise Zone Tax
Benefits (CIT and PIT):
The Budget proposes
to eliminate all enterprise zone (EZ) tax incentives and similar tax incentives for
specific areas for tax years beginning on or after January 1, 2011. These areas will
include EZs, Targeted Tax Areas, Manufacturing Enhancement Areas, and Local Agency
Military Base Recovery Areas. The tax benefits provided for most of these areas include;
a hiring credit, a credit for sales tax paid, a credit for employees who earn wages
within the area, and a deduction for interest received from businesses in an area.
This proposal would eliminate these tax benefits, both for newly earned credits and
deductions and for credits that had been earned in prior years, but had not yet been
used. Local agencies that want to keep any local incentives could continue to do so.
TALX will continue to monitor the EZ situation
and will work to determine the best strategy to maintain the programs.
This weblog is sponsored by TALX.