San Diego Life Sciences Leaders Show Support for Governor’s Tax Changes
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Bill Geppert, interim CEO of the San Diego Regional Economic Development Corp., and Camille Sobrian Saltman, president and COO of Connect, the non-profit group that supports entrepreneurship and technology innovation in the region.
Gollaher also voiced the institute’s support for Gov. Brown’s tax plan, saying it’s “refreshing” to hear a political leader as focused on jobs as the California governor. Yet with federal employment data showing that no new jobs were added in August, job creation has become more of a political topic de jour. President Obama is scheduled to outline his jobs plan before a joint session of Congress on Thursday, and Republican presidential hopefuls also have focused more specifically on job creation over the past week.
Still, Gollaher pointed out that the “life sciences is one of the industries where America still maintains its global leadership,” although other countries now clearly see the advantages of “high-wage, high-tech jobs that can compete across the global borders of the future.”
Gov. Brown has asked California lawmakers to change a 2009 tax rule that allows companies to choose between two tax formulas, which has put California-based companies at a disadvantage with out-of-state competitors. The rule allows companies to choose between a “double-weighted sales formula” that considers the company’s sales, property, and payroll—or they can use a “single-sales factor” formula based only on sales in California. Eliminating the double-weighted sales formula and using only the single-sales factor tax would require companies to pay more in sales tax if they sell goods in California but do not employ many California residents.
A Biocom official said the nonprofit trade association, which represents 560 life sciences companies throughout California, has supported the change for a long time.
Brown’s proposal also provides small businesses with up to 50 employees a $4,000 tax credit for each new in-state hire and offers companies a tax exemption for purchases of new manufacturing equipment.
“For our smaller and startup companies, perhaps the most significant aspect of the package is the exemption of equipment used in manufacturing or research and development from CA state sales tax,” Panetta said.
“In the life sciences industry, a single piece of equipment may cost tens or hundreds of thousands of dollars,” Panetta said. “Recognizing the costly reality of equipping a life science company, it is easy to see how a sales tax exemption of 4 percent for startup companies and 3 percent for others can translate into real and badly needed jobs.”