State Audit to Examine Efficacy of Corporate Tax Credits and Incentives Approved Today, as Requested by Long Beach’s Senator Lara • Long Beach Post

Ricardo Lara Official 2015 3State Senator Ricardo Lara requested the state’s Joint Legislative Audit Committee (JLAC) approve an audit of California corporate tax expenditures, examining their effectiveness and benefit to the state. The audit was approved with bipartisan support, Lara’s office announced today. 

According to a release issued today by Lara’s office that cited a Department of Finance report, California invests over $5 billion each year on corporate tax credits. 

“California law allows various tax credits, deductions, sales and use tax exemptions to provide incentives to taxpayers, or to influence business behavior, but are these credits effective?” said Lara in a statement. “It is vital that we evaluate existing tax credits and incentives to ensure that they are successfully meeting outlined goals and that California is receiving the highest return on its investment.”

Specifically, the audit will evaluate whether numerous tax credits approved by the state legislature aiming to create jobs have achieved the established objectives. 

According to the release, the audit is looking to examine at least six of the largest corporate tax credits and incentives set aside in the last three years, as stated by a Department of Tax Expenditure report, in addition to the following: 

  • Identify the purpose for which the credits and incentives were established and determine whether those credits are fulfilling their intended purpose.
  • Determine the cost impact of those credits and incentives on the State and whether the benefits derived from those expenditures justify the cost to the State.
  • Determine whether certain types of incentives are more effective or beneficial to the State economy.
  • To the extent possible, determine the impact a cap on total expenditures for each tax credit would have on the State.

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