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Enterprise zone offers big credits for hiring

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POSTED October 10, 2009 3:02 a.m.

Municipal leaders are touting the expanded San Joaquin County enterprise zone that includes virtually the entire city as a way for business to get an edge by expanding or locating in Manteca.

The enterprise zone designation put in place through 2023 in recognition of high unemployment in San Joaquin County contains numerous tax incentives for businesses.

 The biggest, though, is the state tax credit for hiring “qualified” workers that can end up saving the employer more than $37,400 over a period of five years per qualified employee.

The tax credit is based on qualified wages paid and starts out at 50 percent of the wages in the first year, 40 percent in the second year, 30 percent in the third year 20 percent in the fourth year, and 10 percent in the fifth year.

If a qualified worker hired makes $12 an hour and is paid $24,960 for a year the business would get a $12,480 tax credit against state tax liabilities for the first year. Someone working full time at minimum wage hired under the tax credit loan would earn $16,640 at $8 an hour allowing the employer to save $8,320 the first year in state taxes.

Qualified employees that are hired under the program must meet just one of the following criteria: reside in the enterprise zone, be a dislocated (unemployed) worker, Vietnam era veteran, disabled veteran, recently separated veteran, native American, native Samoan, native Hawaiian, disabled individual, someone eligible for CalWorks, economically disadvantaged, ex-offender, or someone who is eligible for or receives public assistance.

Employers locating in an enterprise zone can also qualify for other fairly large state tax benefits and credits:

• Up to $20,000 in a business expense deduction.

•Tax credit for sales and use taxes paid on certain machinery purchases in excess of $20 million.

•Double the net operating loss carryover which means 100 percent can now be put into another tax year.

•Lenders helping with enterprise zone investments can receive deductions on interest.

San Joaquin County - and the participating cities of Lathrop, Lodi, Manteca, and Stockton – also have agreed to reduce building permit and plan fees in the enterprise zone as well as reduce permit and variance application fees.

Employers locating in enterprise zones with 100 workers or more can also receive a utility tax rebate.

The enterprise designation will give the Airport Way corridor an effective 1-2 punch. The tax advantages tend to attract manufacturing jobs which bodes well for the Lathrop side of the corridor. Manteca has been working with investors interested in creating a 200-acre business park just outside the enterprise zone bordered by Roth Road on the north, the City of Lathrop and the Union Pacific rail-to-truck transfer year to the west and Airport Way on the east.

The location adjacent to rail and close to the rail-truck facility as well as freeway via the Highway 120 Bypass, the Stockton Airport just six miles away and the Port of Stockton makes it ideal for huge distribution centers.

The initial enterprise designation given to Stockton in 1993 is credited with attracting well over 2,000 jobs around Stockton Metro Airport.

The can be a maximum of 42 enterprise zones in the state.

There new expanded San Joaquin County enterprise zone went into effect in June and expires in 15 years.

For more information on the enterprise zone tax credits either e-mail ezmanager@sjcworknet.org or call 468-3615.

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