| Abstract | The California Competes Tax Credit (CCTC) is a relatively new tax credit offered to businesses as an incentive to invest in and create jobs in California. Companies compete for the credit amount, and there is no standard credit amount per dollar invested or employment granted. A list of recipients is posted by the California Governor's Office of Economic Development each year. This paper explores the possible trends in the types of firms that receive the credit and how the program has influenced job development and growth for the economy of California. The purpose of this paper is to gain a better understanding of what the California Competes tax credit does and how effective it is in accomplishing its goals. Results from a descriptive analysis of credit recipients show: (1) high population areas seem to receive more credit dollars than low population areas, (2) the majority of recipients are in the services or manufacturing industries, (3) high poverty/unemployment areas receive, on average, significantly less credit per dollar invested than other counties within California, and (4) high poverty/unemployment areas receive, on average, significantly more credit per new job created than other counties within California. Evidence presented in this paper shows that the California Competes Tax Credit did not significantly increase employment nor economic growth in California. There is little evidence that the CCTC beneficially affected California's GDP or employment growth relative to its surrounding states. Also, high poverty/unemployment areas did not benefit from the CCTC program more so than other California counties in terms of reductions in unemployment. |
