Talk to business leaders who dealt with the legislature over the past few months and they often expressed frustration that the legislature, while understandably focusing on employee concerns, were giving businesses short shrift. But at the last minute, a gut-and-amend bill did move ahead to give small businesses a boost to help them rebound from the disastrous business collapse.
SB 1447, authored by Senator Steve Bradford, created a $100 million tax credit for small businesses to rehire and hire workers through November 30 at a $1,000 credit per worker.
There are qualifying parameters for small businesses to claim the credit including documenting a loss of 50% of its revenue over the last year. The maximum a small business can claim is $100,000 and it can use the credits over the next five years. Gov. Newsom signed the bill.
California’s small businesses were devasted by the business lockdown. Unemployment in the state shot up to over 16%. SB 1447 is intended as an incentive to bring workers back on the jobs at a time that is uncertain how robustly the economy will come back. In a sense, the incentive is based on a supply side concept of a tax cut in the form of a tax credit to expand small businesses by adding employees to improve services and generate increased business.
The tax credit means less revenue coming in when the state budget is already stressed because of reduced revenue. There were raised eyebrows that the legislature went down this path at this time, but it makes sense for government. The idea is to get people back to work and build back the economy as quickly as possible to generate more revenue for the state treasury.
The business community wished for more from the legislature. Chief among concerns, the liability issue that businesses could face because of the pandemic, was not addressed. But the hiring bill does give small businesses a chance to rise from the ashes of the lockdown, and workers can get back on the job earlier than expected with the new incentive.
“Now more than any other time in recent history, California small businesses desperately need relief and struggling men and women need jobs. SB 1447 is a step in the right direction,” John Kabateck, executive director of the National Federation of Small Business/California said in an email.
“This tax credit helps fragile mom and pops with some financial support and helps to encourage and recognize the hiring and rehiring of Californians in need of a paycheck to feed their family, pay their utilities and keep a roof over their head. NFIB is proud to stand with Senator Bradford in support of this pro-Main Street legislation,” Kabateck concluded.
Now, if the legislature could only work on the liability issue.