California Enterprise Zones: A Boon or a Boondoggle?

I pulled the title of this post from an article today by Jay Prag, a professor of economics and finance at the Peter F. Drucker School of Management in Claremont.  His opinion piece was published Thursday in the Capitol Weekly: The Newspaper of California Government and Politics.
Mr. Prag’s piece explores the current (drawn out and won’t it please  finally stop already) debate about the future of California’s enterprise zone program.  While politicians on one side of this debate come up with bill after bill to cut or destroy the enterprise zone program, others are continually proposing ways to expand and improve it.  So far, the program continues to expand and its opponents have been unsuccessful.
Take a minute and read Professor Prag’s article.  He makes some persuasive points.  I’ll just quote his conclusion here, which comes down strongly in support of California’s enterprise zone program.

Looking forward and not back, California has double-digit unemployment now and likely will for many years to come. States all around the country are competing for employers. The tax advantages of our enterprise zones are one of our very best and most effective tools for bringing employers to the state. As the biggest state in the union, we need the most jobs. Anything that worsens the business climate and job picture in California – and that includes even talking about eliminating the enterprise zones – is, to be blunt, insane.

As a jobs incentive, California’s enterprise zones offer a substantial state income tax credit as an incentive to hire employees to work within the zone.  Many of California’s 42 enterprise zones also include Targeted Employment Areas (or “TEA”s), which trigger a tax credit when zone businesses hire workers who live in these economically distressed residential areas.

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