Tax Incentives for Business

Contrary to what Lenny Goldberg’s commentary in The Times (“Bamboozled by Business Tax Breaks,” June 2,) implied, tax incentives designed to attract new businesses and to retain existing businesses are an integral part of a state’s overall economic plan.

Surveys or studies cited by Goldberg are misleading and manipulated to understate California’s tax burden. For example, they do not see total costs of doing business in California (such as the explosion of local taxes and fees), and therefore are not an accurate reflection of tax burden compared to other states.

When deciding where to locate, companies give considerable weight to incentives offered by competing states.

Responding to the growing problem of California-headquartered companies being wooed by other states, Assembly Speaker Willie Brown has introduced a 6% investment tax credit for business location or expansion of headquarters in California. The Speaker’s office has provided testimony that this investment tax credit will generate more than $150 million in state revenues over four years.

Gov. Wilson, the California Chamber of Commerce, the Los Angeles Economic Development Corp. and a host of economists support it.

Clearly, California has lagged behind competitor states in providing the kind of tax environment that is warranted in today’s economy. In the spirit of improving the state’s economy, incentives to create and maintain jobs are absolutely necessary.

LARRY McCARTHY

President, Cal-Tax

Sacramento

It is no wonder that Goldberg is under the impression that businesses are happy as clams in Southern California and need no assistance--he lives in Sacramento.

Perhaps if Goldberg visited us once in awhile, he would realize that California’s high-tax, highly regulated business climate offers all too many disincentives for businesses to stay in the state. The better the incentive package, the more likely a business is to choose that state when relocating or expanding. By way of specific example in Orange County, since 1989, 81 companies or divisions of companies have moved out of the state, costing a job loss to the county of 13,700 direct employment positions. Countless other workers in support industries were also impacted by the loss of those jobs.

When strong businesses leave the state for better opportunities elsewhere, who is left to pay the costs of government but the overburdened individual taxpayer. Let’s not be penny-wise and pound-foolish. We need to keep our jobs here in California.

WAYNE D. WEDIN

Chairman, Orange County

Economic Development Consortium