Community Development Incentives
Under the G-TEDA programs, businesses and other entities located within targeted areas are eligible for a variety of local- and state-provided incentives. Examples of incentives commonly offered by local governments include subsidizing the cost of development, funding related infrastructure improvements, providing job training and technical assistance to local businesses, and/or establishing more streamlined processes for obtaining permits.
The state also offers a number of incentives, including tax credits, priority notification when selling state surplus lands, access to certain brownfield clean-up programs, and preferential treatment for state contracts.
Below is a chart comparing the state tax incentives offered to businesses located in a G-TEDA.
Comparison of State Tax Benefits by Targeted Area |
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|
Hiring Credit
|
Longer NOL Carry- Forward Period |
Sales and Use Tax Credit |
Accelerated Depreciation |
Lender Interest Deduction |
|
|---|---|---|---|---|---|
|
EnterpriseZone |
X |
X |
X |
X |
X |
|
Manufacturing Enhancement Zone |
X |
||||
|
Targeted Tax Area |
X |
X |
X |
X |
|
|
Local Agency Military Base Recovery Area |
X |
X |
X |
X |
|
|
Source: Legislative Analyst's Office |
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Below is a chart summarizing total G-TEDA credits claimed in the 2004 through 2007 tax years.
Comparison of Total G-TEDA Credits Claimed in the 2004 to 2007 Tax Years |
||||
|
Total G-TEDA Credits per Tax Year |
2004 |
2005 |
2006 |
2007 |
|---|---|---|---|---|
|
Number of Credits Claimed on Corporate Taxes |
3,256 |
4,325 |
4,851 |
5,631 |
|
Value of Credits Claimed on Bank and Corporate Taxes (thousands) |
$218,726 |
$216,416 |
$230,751 |
$251,591 |
|
Number of Credits Claimed on Personal Income Taxes |
5,054 |
8,270 |
9,973 |
15,461 |
|
Value of Credits Claimed on Personal Income (thousands) |
$130,401 |
$146,204 |
$154,926 |
$179,343 |
|
Source:Data Provided by the Franchise Tax Board |
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The Franchise Tax Board (FTB) reported that in 2007 – the most current data available – $481 million in G-TEDA credits and deductions were claimed through corporate and personal income tax returns. Additionally, FTB reports hundreds of millions in carryover credits have been earned by businesses located in G-TEDAs, but they have not been claimed. Below is a chart that displays the dollar amount of G-TEDA incentives claimed through each of the tax incentives.
Clained G-TEDA Incentives 2004 to 2007 |
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|
|
2004 |
2005 |
2006 |
2007 |
|---|---|---|---|---|
|
Hiring and Sales Tax Credit |
$349,127 |
$362,620 |
$385,677 |
$430,934 |
|
NOL Deductions |
$72,326 |
$74,024 |
$126,106 |
$207,993 |
|
Tax Impact |
$5,171 |
$5,966 |
$11,351 |
$15,807 |
|
Net Interest Deductions |
$432,867 |
$490,129 |
$517,310 |
$520,372 |
|
Tax Impact |
$29,103 |
$32,395 |
$34,156 |
$34,438 |
|
Business Expense Deductions |
$4,387 |
$4,770 |
$4,463 |
$5,136 |
|
Tax Impact |
$222 |
$200 |
$188 |
$197 |
|
Total Tax Impact |
$383,624 |
$401,181 |
$431,371 |
$481,376 |
|
Data Provided by the Franchise Tax Board 11/9/09 |
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