SAN DIEGO, Calif. /California Newswire/ — Governor Edmund G. Brown Jr. today will join San Diego business leaders at Gen-Probe, Inc. to call on the state Legislature to pass his California Jobs First plan, which eliminates a “toxic tax loophole” and offers over $1 billion a year in tax relief for businesses that create jobs in the state.
“My plan eliminates a toxic tax loophole that undermines job growth in California and gives manufacturers and small businesses incentives to invest and hire in California,” Brown said. “It’s time to set aside partisan differences and come together to put Californians to work.”
Governor Brown’s plan, unveiled late last month, provides small businesses with up to 50 employees a $4000 tax credit for each new in-state hire and offers companies a tax exemption for purchases of new manufacturing equipment.
The Governor will discuss his plan today at Gen-Probe, Inc., a bio-technology firm, headquartered in San Diego, that develops, manufactures and markets products to screen blood supplies. The company was founded in 1983 and employs more than 900 Californians.
“Governor Brown’s jobs plan is a practical, common-sense approach to encourage the private sector to hire and manufacture in California, and to support the growth of small businesses,” said Gen-Probe, Inc. president and CEO Carl Hull.
The first part of the California Jobs First plan reforms and expands an underutilized tax credit for small businesses worth hundreds of millions of dollars. To date, much of this funding has been left on the table because too many small businesses were excluded from the credit. The Governor’s plan expands eligibility to small businesses with up to 50 employees (up from 20) and the credit for each new hire will jump from $3,000 to $4,000. These changes will encourage small businesses to hire immediately, as the credit will expire at the end of 2013.
The second part of the California Jobs First plan will give California’s economy an immediate shot in the arm by providing over $1 billion in tax relief to businesses that purchase new manufacturing equipment. The plan exempts start-ups in their first three years from the state portion of sales tax (3.9375 percent)—and provides an exemption of 3 percent for all other firms— on manufacturing equipment purchases. The exemptions will drive innovation, investment and growth by targeting many of California’s most dynamic industries, including manufacturing, biopharmaceuticals, clean energy and software.
The backbone of the California Jobs First plan is the application of the Mandatory Single Sales Factor (SSF) to all businesses in California. This change levels the playing field by eliminating what Governor Brown has called “an outrageous and perverse tax incentive that encourages multi-state businesses to create jobs outside of the state.” This places California-based businesses at a competitive disadvantage and is a disincentive for out-of-state businesses to locate jobs here.
The revenues produced by closing this loophole will fund the expansion of the small business tax credits for new hires and the sales tax exemption for manufacturing equipment.
The Governor will also be joined today by leaders from the California Healthcare Institute, Inc. (CHI) and BIOCOM, who have expressed strong support for his plan.
“CHI, representing the biomedical industry in the state, supports Gov. Brown’s effort to incentivize investment in innovation and job growth in California,” said California Healthcare Institute, Inc. president and CEO David L. Gollaher, Ph.D. “The biomedical industry is one of the strongest sectors in California’s hard-hit economy and has been a catalyst for innovation, job growth and revenue that could help lead the state to economic recovery. The governor’s jobs package will provide valuable incentives to promote continued growth for California’s innovator industries.”
“The Governor’s jobs package, particularly its state sales tax exemption component, will allow California companies to create jobs, rather than pay state sales tax on equipment used for job creation, which will make California more competitive with other states,” said BIOCOM president and CEO Joe Panetta. “BIOCOM commends the Governor and the legislative leaders he has worked with on developing a jobs plan for California that will move our state forward.”