Tax law helps green manufacturers grow profits

California Senate Bill 71 recently was signed into law by Governor Arnold Schwarzenegger. The new legislation exempts green manufacturers from paying sales and use taxes on manufacturing equipment and is meant to encourage investment in manufacturing, job creation, and economic growth in the beleaguered state.

But there's a catch. SB 71 requires a project that receives tax exemptions to have a net tax benefit to the state at least equal to the tax benefit of the manufacturer benefiting from the exemption. Apparently, the burden of proving this lies with the manufacturer, and it is not entirely clear how manufacturers would go about figuring whether the two tax benefits are equal.

SB 71 also requires that these projects target areas with high unemployment. Today the entire state might qualify as such an area. But particulars of what happens if employment rates change in certain areas of the state are not initially clear. Additionally, SB 71 requires the Legislative Analyst's Office to report to the Legislature on the program's effectiveness. For more information, visit www.sen.ca.gov.

Resources

Gas Turbine Efficiency, Orlando, Fla., www.gtefficiency.com