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Gov. Jerry Brown proposes job creation plan for California

August 25, 2011 |  1:03 pm

Brown Gov. Jerry Brown wants to expand a hiring tax credit and provide tax relief to businesses that buy manufacturing equipment, while getting rid of a loophole that voters supported in elections in 2010.

Brown's California Jobs First package was announced a week after the state Employment Development Department said that hiring slowed in July to just 4,500 jobs, helping push the  unemployment rate to 12%. The state has the second-highest unemployment rate in the nation, after Nevada. Business creation in the state has also slowed to a halt, according to a study released earlier this week.

"Boosting job growth in California is a top priority, and this proposal is a critical step in making sure the state does everything it can to support local job creation," Brown said in a statement.

The first part of Brown's plan expands a tax credit for hiring new employees. He wants the credit to include small businesses with up to 50 employees and to increase the credit to $4,000, from $3,000.

The second part will make start-ups exempt from the state portion of sales tax on manufacturing equipment for their first three years in business. It also exempts 3% of other firms for those same purchases. Brown's office estimates this will provide $1 billion in tax relief to businesses.

The third part could be the most controversial. It would make a single sales factor tax mandatory on all businesses in California. Currently, multi-state businesses can choose how their sales tax is calculated. They can chose between basing their taxes on the proportion of their sales occurring in the state, or on a combination of sales, payroll and property in the state.

One of the provisions of Prop. 24 in the 2010 election would have disallowed corporations from choosing how to calculate their taxes, but Prop. 24 was not passed. 

"It's time to enact this common sense plan that puts California's economy and our jobs ahead of out-of-state tax loopholes," said Assembly Speaker John A. Perez.

RELATED:

California's business tax burden no heavier than average

California plunges to bottom in job creation

California jobless rate grows to 12% in July

-- Alana Semuels

Photo: Gov. Jerry Brown in Sacramento. Credit: Eric Paul Zamora/The Fresno Bee

 

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