Since 1990, the value of annual business development incentives provided by state and local governments across the U.S. has tripled to about $50 billion.
Economic development incentives include cash grants/loans, services, or tax breaks that an industry, group of firms, or individual firm receives. These incentives are meant to bolster the growth of jobs in a given state or a geographic area, that has been labeled a labor market. For a region to be considered a labor market, it should be large enough so that an increase in jobs in that area will increase the number of jobs available to local workers. This means the area covers a significant part of the local commuting flows. Moreover, shifting jobs from one neighborhood to the other would not impact job availability because many people’s workplaces are not in the neighborhood they reside.
Why Is Job Growth Important?
Why should local and state governments strive to promote job growth? What is wrong with jobs that are created by the private sector without the input of the government? Why are incentives desirable but often ineffective?
While jobs come with social benefits, the rate of job growth driven by the private sector is not enough because private employers often don’t consider the social gains. As such, they do not expand jobs at a fast enough pace. When the number of jobs available in an area increases, more residents are employed. The work experience gained increases the residents’ work skills. With better job skills, these residents will likely enjoy higher earnings and higher employment rates well into the future. An increase in the number of jobs also expands the local and state tax bases.
Why Incentives Fail to Achieve the Desired Outcome
Research reveals that, in at least 75% of the cases, incentives do not influence businesses’ decisions on where to base their operations and create jobs. Additionally, even when incentives sway businesses’ location and employment decisions, they often don’t offer a good return on investment. They create new jobs, but they also attract new workers from outside the state or city, increasing public services costs that take up at least 90% of the increased revenue. Only when incentives increase employment rates – consequently pushing local wages upward and boosting local earnings – can produce broadly shared and significant local benefits. When well-designed tax incentives are coupled with business services and other well-thought-out policies, they can become effective and economical ways to bolster broad local economic growth.
How to Make Business Incentives Work
Here is an incentive design checklist that’s backed by the latest research in the field:
- Will the businesses supported by the incentives provide multiplier effects?
- Do the incentives target economically distressed areas?
- Are the cash incentives provided upfront?
- Do they include requirements and incentives to hire locally?
- Do they include an adequate mix of tailored business services?
Incentives Available for Businesses in Ventura County
California Business Grants
There are more economic and business opportunities in California than in any other place in the world. If you’re considering relocating or expanding your business to California, you will benefit from the confidential, no-cost grant and incentive navigation services provided by the Governor’s Office of Business and Economic Development Office. Their business consultants will help you navigate the wide range of business grants you can access in California. Click here for more information.
California Business Incentives
In the State of California, you can access a wide range of financing and incentive programs via the California Business Portal.
California Competes Tax Credit
If you want to move your business to California or stay and expand, your enterprise can benefit from this income tax credit (California Competes Tax Credit). Businesses of any size or industry can compete for the available tax credits over $180 million. There are three application periods per year. Applications are analyzed based on various aspects of evaluation, including the amount of investment, the full-time jobs that will be created as well as the strategic value of the business to the region or state. Click here for more information.
California Research and Development Tax Credit
Is your business undertaking research? You can reduce the cost of your research endeavors with the support of the California Research and Development Tax Credit. This credit is hinged on a slightly modified Federal Research Credit. If you’re undertaking qualified research activities, you can benefit from this credit. Here is how the credit is calculated:
- 15% of your qualified costs that surpass a base amount
- 24% of the basic research payments
You can also opt for an alternative method on an original and timely filed return. Click here for more information.
Ventura County has a growing economy that’s undergirded by six key industries: health services, manufacturing, construction, agriculture, leisure & hospitality, and technical/scientific/professional services; it’s an ideal place to start a new business. The nearly 860,000 people who reside in Ventura County enjoy quality public schools, as well as stunning national parks. Moreover, Ventura is among California’s ten healthiest cities.
Business Forward Ventura County is a business resource hub and countywide initiative that’s committed to providing economic development help to enterprises throughout Ventura County. Business Forward is the bridge through which the County of Ventura as well as its ten cities, the Economic Development Collaborative, the Economic Workforce Development Board, and other business resource providers, deliver services and resources that help local businesses thrive. To benefit from the immense resources and incentives available in Ventura County, email us at email@example.com or call (805) 409-9788 today.