In a recently released report, the California Legislative Analyst’s Office recommended that the California Competes program should be eliminated because it does more harm than good—including disadvantaging small business—according to the Sacramento Business Journal. The program gives tax credits to incentivize businesses looking to invest in California. But the LAO reported that these credits unintentionally hurt other deserving businesses in the state, and might not be all that effective in attracting businesses anyways.
The LAO recommended replacing the tax credits with tax relief for businesses, instead. If the state wants to keep the program, the LAO suggested fixing the small business provisions, shifting the focus to jobs or investments that would choose outside of California otherwise, and increasing business eligibility requirements.
NFIB/California Executive Director Tom Scott thinks the program should be scrapped entirely in exchange for tax breaks for businesses. “Business owners have a hard enough time even knowing these programs exist, much less understanding if they qualify, how to apply, etc.,” Scott said. “Back in June, the Go-Biz committee approved $62.8 million in tax credits for 87 companies. We have 3.8 million small businesses in the state of California that are struggling. Any form of relief would be preferred.”