California Enterprise Zone Opponents Propose a Dumb Idea


Today, I am varying from my usual approach in order to share an opinion with you. (Of course, we will also keep watching for important developments in state and federal news.)
The California enterprise zone program offers lower state taxes to employers setting up operations inside any of 42 zones located throughout the state. For businesses using the program, it has been a godsend in the current economic crisis.
But, the program has its enemies. Foremost are California labor unions and Governor Jerry Brown. The Governor’s new budget proposes to eliminate it.
One of the arguments advanced by those wishing to dismantle California’s enterprise zone program goes something like this. “Because the primary benefit of these zones is to shift economic activity from one geographic region within California to another geographic region within California, they are not of statewide interest.”
In other words, the enterprise zones are simply competing for jobs with other areas within California itself. While an enterprise zone might improve the community it serves, the benefit to the state overall is small.
Maybe this once was true. The enterprise zone program has been around for more than 20 years. Perhaps during most of that time the enterprise zones were primarily a regional concern. Maybe Governor Brown’s argument was true, ten years ago.
The sad truth today, however, is that enterprise zones’ most important competitors for jobs are no longer other areas within California. Employers are now moving out of California. Say hello to Texas and Nevada. The enterprise zones are the only serious buffer against a business environment many companies now view as toxic.
The idea that dismantling this program will generate a few hundred million more in taxes is — well, a profoundly dumb idea. What it will do is add another ounce of poison to California’s economic cool aid.
The chronic budget deficit that Governor Brown is rightly attempting to solve will only be solved by a stronger California economy. Dismantling California’s enterprise zones would only weaken our economy and help to ensure budget deficits in the future.

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