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AB-600 Manufacturing incentives.(2017-2018)

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Date Published: 02/14/2017 09:00 PM
AB600:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Assembly Bill No. 600


Introduced by Assembly Member Cooper
(Principal coauthor: Senator Galgiani)

February 14, 2017


An act relating to economic development.


LEGISLATIVE COUNSEL'S DIGEST


AB 600, as introduced, Cooper. Manufacturing incentives.
Existing sales and use tax laws impose a tax on retailers measured by the gross receipts from the sale of tangible personal property sold at retail in this state, or on the storage, use, or other consumption in this state of tangible personal property purchased from a retailer for storage, use, or other consumption in this state. Those laws provide various exemptions from those taxes, including, among others, a partial exemption from state sales and use taxes until July 1, 2022, for sales or purchases of machinery, equipment, or certain other tangible personal property purchased for use primarily in research and development, the manufacturing, processing, refining, fabricating, or recycling of tangible personal property, or other specified purposes. Existing law limits availability of the exemption to purchases by persons primarily engaged in certain lines of business and limits the total amount of purchases for which a person may claim the exemption to $2,000,000 per calendar year.
This bill would express the intent of the Legislature to improve the state’s manufacturing incentives to promote a stronger California economy by securing a greater share of the high-paying, high-skilled jobs in manufacturing and research and development and would make legislative findings in this regard.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 The Legislature finds and declares all of the following:
(a) In 2013, California enacted a partial sales and use tax exemption for manufacturing and research-and-development equipment to encourage capital investments and job creation and to make California more competitive in attracting new businesses and expansions of existing businesses.
(b) According to the Reshoring Initiative, the United States of America has brought approximately 130,000 manufacturing jobs back from other countries between 2010 and 2015. However, the report also shows that California only attracted 1,479 of those reshored jobs, meaning that California missed out on the opportunity to grow its manufacturing sector and create more high-paying middle-class jobs.
(c) The manufacturing sector is important for the long-term health of California’s economy and middle-class growth potential with an average annual wage of $83,000 and the multiplier effect that results in approximately 2.5 jobs created for every manufacturing job created.
(d) California must take steps now to create an investment environment that attracts more manufacturing and research-and-development jobs in order to be more competitive with the 48 other states that exempt manufacturing equipment from sales and use taxes, and to benefit from reshoring and other economic growth opportunities.

SEC. 2.

 It is the intent of the Legislature to improve the state’s manufacturing incentives to promote a stronger California economy by securing a greater share of the high-paying, high-skilled jobs in manufacturing and research and development.