Competition is inevitable and businesses aren’t the only entities that have to compete. Since the economic downturn many states have been competing for your business by offering incentives such as tax holidays, training credits, reduced power costs and other credits.
While at the Walmart US Manufacturing Summit in Denver last August I, spoke to representatives from over 30 states about what they were doing to bring manufacturing to their state. My favorite slogan at the time was “Made in the USA – Perfected in Mississippi” but I have to admit that “Cal Competes” is now gaining ground..
Cal Competes refers to the new The California Competes Tax Credit, an income tax credit available to businesses that want to come to California or stay and grow in California. Tax credit agreements will be negotiated by GO-Biz and approved by a statutorily created “California Competes Tax Credit Committee”. According to the CA Go-Biz website, this tax credit was signed into legislation in 2013 and since then has approved $31 million in tax credits for 56 companies. These companies including, Samsung Semiconductor, Amazon Fulfillment and Niagara Bottling are projected to create 4,900 jobs and generate over $900 million in investments in CA.
Companies apply for tax credits at www.calcompetes.ca.gov and GO-Biz evaluates the most competitive applications based on the factors required by statute, including total jobs created, total investment, average wage, economic impact, strategic importance and more. Companies are exempted from paying state income taxes in the amount awarded. For large companies like Samsung this is $6 million and for smaller companies like Delta Hi-Tech a CNC Machining company it is $20,000.
GO-Biz also offers workshops and webinars to help you through the application process and government red tape. For the 2014-2015 fiscal year, there is one last application period starting on March 9th where $31.1 million was allocated plus any unallocated amounts from the previous application periods.
So what does this mean for you if you aren’t a CA business or looking to move to CA? Well, we encourage you to look into what your state is doing to compete. If your state doesn’t have similar incentive programs, start working with your state economic development mangers to draft a plan. Bringing business back to the US and your state is everyone’s responsibility. If you need assistance working with your state government, contact us.