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legislative analyst weighs in on sb1291

Here is the latest on SB1291 (Alquist):

First of all notice that:

EXISTING LAW requires entities engaged in manufacturing, research & development, telecommunications, software production, printing, biotechnology or pharmaceuticals that purchase, lease or rent equipment and other supplies to pay sales or use tax on their purchases of tangible personal property. But purchases of tangible personal property that become ingredients of an item to be resold are exempt from tax.

So much for Elaine Alquist’s claim that her bill is to reduce “double-taxation” to the poverty-striken manufacturers.

But what about the jobs?

It is unclear whether any incentive could make a difference in job growth in the manufacturing sectors of the economy due to the macroeconomic trend of outsourcing. This bill’s predecessor, the Manufacturers Investment Credit, offered a 6% income tax credit for purchases of manufacturing equipment for use in California. There is little evidence that this credit actually created many new jobs. The MIC’s sunset provision, based on growth in jobs, eventually allowed the MIC to sunset due to too few new jobs.

So the jobs are imaginary but the cost is not:

Based on Board of Equalization data, estimated state revenue loss from the bill would be about $1.75billion annually starting in 2006.

Posted in 2006-06-06-measure-a, political.


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