A 2009 small business tax credit program in California may serve as a test sample for similar nationwide programs. The program, launched in 2009, set up a $400 million tax credit for small businesses as an incentive to hire and, ultimately, reduce the state's massive unemployment rate, which has hovered above 12 percent since November of 2009.
However, only ten percent of the funding has been claimed, according to the Los Angeles Times, prompting many legislators to consider dropping the program in light of the state's $28 billion deficit.
Although officials have been perplexed by the lack of response, many small businesses have posited that, even with the $3,000 tax credit, they have just been too tight on cash to hire.
The tax break "made the difference for some folks who were ready to hire to make that final decision," Michael Shaw, California legislative director for the National Federation of Independent Businesses, told the LA Times, "but it's not going to help someone who's struggling to keep their doors open to hire someone to get that credit."
Recent surveys of small businesses have been a mixed bag for the sector, showing declines in confidence but gains in borrowing and employment. The failure of this tax credit program may indicate continued troubles for startups seeking to incorporate in California.
Tags : ca, small business management, taxes
Posted: Jan 13th, 2011