One of my first stories as a young reporter at the Baltimore Sun was about a federal enterprise zone in a poor neighborhood known as Pigtown (it had once had slaughterhouses). The zone was supposed to boost local hiring and jobs by giving companies a $3,000 tax credit for every local person they hired. In practice, it worked differently. One big company let its local employees go, replaced them with Vietnamese immigrants recruited from Virginia, helped those immigrants move to Pigtown, and collected the tax credit.
Enterprise zones don't work any better in California, according to any number of studies. Last year, the Public Policy Institute of California compared enterprise zones in the state with similar areas that aren't enterprise zones and discovered this: enterprise zones had no effect on jobs and business creation.
The state legislature is now considering legislation to remake the enterprise zone program, replacing the hiring tax credits (which are so famously easy to game, as I learned in Baltimore) with a new tax credit for vocational training. The measure faces strong business opposition, the Sacramento Beereports.
I'm not sure if a vocational tax credit will produce much. But eliminating a tax credit that doesn't work at a time of budget crisis makes all the sense in the world.
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