Business Tax Credit Conformed to the Law

Re “Firms Pay Nothing, Get Plenty,” Dec. 26: The legislative statute requires that businesses that purchase new manufacturing equipment receive a 6% tax credit.

Sales tax on equipment in Los Angeles is 8.25%. The state is giving only a partial credit on the sales tax collected. For Assemblyman Mark Ridley-Thomas to be critical of this tax credit is tantamount to canceling income tax refunds because state government is running a deficit.

Other members of the Legislature were unhappy that the State Board of Equalization was legally providing state-promised credits.

Former Sen. John Burton introduced legislation to stop this, which failed. The compromise that passed allowed only 22 companies to receive the promised tax credit. The board’s decision conformed to the law written by the Legislature. We operated under the advice of counsel. Had we not acted, 22 lawsuits may have been filed. Had we lost in court, we would pay the refunds, interest and attorney fees.

For Burton and other legislators to deny what is rightly due taxpayers is demagoguery. Luckily for California taxpayers, they have an independent elected board rather than legislative puppets of Burton.

Claude Parrish

Vice Chairman, State

Board of Equalization

Long Beach