Giveaways to strip clubs? Ah, your government is at work again

strip2.jpgTax breaks are, in many cases, pretty dumb ideas, and enterprise zones could well be one of the dumbest. Gov. Brown has been pushing to end to the state's $750 million enterprise zone program for reasons that are abundantly clear after reading a report by the Sacramento Bee's Richard Chang. The program offers up to $37,440 in credits per employee as an incentive to hire workers in troubled communities, but it turns out that there's plenty of devil in the details. Among the businesses capitalizing on the program are strip clubs, card rooms. and fast food joints. Not that there's anything wrong with these places, but their role in bolstering the state's economy is, well, kind of questionable. More to the point, does anyone seriously believe that the decision to plunk down a strip club or hamburger joint has anything to do with saving a few dollars on taxes? From Chang's piece:

Brown unsuccessfully tried to kill enterprise zones in 2011, ultimately choosing instead to focus his political capital on eliminating redevelopment agencies, another business-friendly program. But earlier this month, he again sought to scrap enterprise zones when he unveiled his May budget revision. Under Brown's proposal, the state would eliminate its 40 enterprise zones and use the money instead for a sales tax exemption for manufacturing and biotech research firms. He would maintain hiring credits but focus them on the long-term unemployed, veterans and people receiving public aid. But the Democratic governor faces an uphill battle, as enterprise zones are located in nearly every legislator's district and thus come with local support.

From a Bee editorial:

Originally championed by thoughtful conservatives such as the late U.S. Rep. Jack Kemp, enterprise zones were intended to encourage businesses to hire unemployed people in impoverished inner cities. In California, however, the enterprise zone concept has been twisted into a profoundly dumb policy. California allows businesses to retroactively claim credits, receiving as much as $37,000 per employee for hiring decisions made years earlier. Consultants visit businesses in enterprise zones and show them how to capitalize on the state's stupidity - for a cut of the action.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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