Some Orange County business executives are pleased that Gov. Jerry Brown has proposed state action to create jobs, but most doubt it does enough to make a major dent in California's 12.0% unemployment rate.
California added 186,600 jobs from July 2010 to July 2011. Still, almost 2.17 million state residents are unemployed (not counting those who have given up looking for work or those with part-time jobs who want to work full time).
Aug. 25, Gov. Brown announced a jobs creation package, which would have to be passed by the legislature. Its three major proposals:
--Expand an existing tax credit that hasn't been used much, allowing firms with up to 50 employees (up from 20 now) to earn a tax credit for each new hire. The tax credit would increase from $3,000 to $4,000 per job. The program expires at the end of 2013.
--Exempt businesses less than 3 years old from the state's portion of sales tax (3.9375%) on the purchase of new manufacturing equipment; exempt other businesses from 3% of the sales tax on manufacturing equipment.
--Require multi-state businesses to pay income taxes on the portion of their sales generated in California, eliminating the option to pay tax based on property and jobs in California.
That last proposal would increase state revenue by $1 billion, which would pay for the other two provisions, Brown said, and eliminate "an outrageous and perverse tax incentive that encourages multi-state businesses to create jobs outside of the state."
Yorba Linda resident Rob Norden, CEO of Recom Group, a San Dimas technology display manufacturer, sums up the view of many: "I am pleased to see ANYTHING coming out of Sacramento to help small business," said "Unfortunately, this is such a small effort that I don't know if it's going to have a significant impact."
Giving Brown high marks for effort is Ronald Stein, vice president of PTS Staffing Solutions, which specializes in job placement for engineers and information technology experts. "Governor Brown is trying to spur a start for entrepreneurs to make choices...(his) first package may spur local job creation."
Those two comments are about as positive as it gets. Many Orange County business people think Brown has misidentified the core cause of California's jobs problem or proposed action that won't prompt many businesses to hire.
Companies don't hire if they don't have enough work, said Adam Vali, president of DEB Construction Inc. in Anaheim. "Our company adds staff when our work loan increases, not because of tax incentives."
Bill Kilbourne, of Technology's Edge, an Irvine IT service, said, "I believe that all of the initiatives in Gov. Brown's proposals are positive steps in helping California to be a more business friendly state. but while this should keep businesses ... in California, the real problem is on the demand side of the equation. The majority of the consumers need more discretionary income to spend on goods and services. Too many people have barely enough money for necessities."
Brown's proposals ignore the complexity of California's business taxes and regulations, said Ken Virgin, CEO of iPayables Inc. in Lake Forest. "The main problem in California is that you have to be a lawyer to run a small business. Even to get the tax credit, I would probably have to hire a lawyer to see what restrictions and penalties will be applied if I do the paperwork wrong.
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