Public Policy Action

Letter Reissued on Sales Tax Exemption for Manufacturing Equipment

By April 25, 2013 No Comments

April 25, 2013

The Honorable Kevin de León
California State Senate
Chair, Senate Appropriations Committee
California State Capitol, Room 5108
Sacramento, CA  95814
 

Re:  SB 376 (Correa) – Support

Dear Senator de León:

For many decades, California has enjoyed a robust and productive manufacturing sector, the engine of the economy. Manufacturers in the state have created high wage jobs through a constant cycle of innovation and investment in new machinery and equipment.  As a result, we are among the most productive and energy efficient manufacturers in the world.  It is no surprise that other states and regions want what we have built over the last decades – manufacturers to propel their economies and employ their citizens in skilled jobs with high wages.

California manufacturers are diverse, with every type of product represented.   One constant feature is every manufacturer has a need for continual modernization to build new products, to meet environmental and safety standards, and to increase the skill level of its workforce.

The equipment needed to meet these needs can be very expensive with relatively long pay back.  The risks are high and investors are looking for locations that will provide the best outcomes.   With improvements in transportation and logistics, manufacturers increasingly have choices to locate facilities all over the country and the world.  Competition for manufacturers is fierce – other states and countries are attempting to lure investments and hiring to other locations.

How can we make sure California is on the short list for manufacturing investment that would succeed in the state?  To beat the competition we need to keep our tax and regulatory policies up to date to remove barriers to investment and hiring.

One obvious barrier to investment in California is the requirement that manufacturers pay sales tax on the purchase of manufacturing and R&D equipment.  Only five other states do not fully, or partially, exempt these purchases from payment of sales tax.

We must address this competitive disadvantage for California manufacturers and encourage them to invest and employ in California.

We urge your “yes” vote on SB 376.

Sincerely,

Acclamation Insurance Management Services
Anheuser-Busch
Baxter Healthcare Corporation
Bishop-Wisecarver Corporation
Bayer HealthCare, LLC
California Asian Pacific Chamber of Commerce
California Business Properties Association
California Cement Manufacturers Environmental Coalition
California Chamber of Commerce
California Chapter of American Fence Association
California Concrete Contractors Association
California Fence Contractors’ Association
California League of Food Processors
California Manufacturers & Technology Association
California Nevada Cement Association
Caterpillar
Chemical Industry Council of California
Consumer Specialty Products Association
The Dow Chemical Company
Engineering Contractors’ Association
Flasher Barricade Association
General Mills
Intel Corporation
Inline Translation Services, Inc.
International Paper Company
Kimberly-Clark Corporation
Lockheed Martin Space System Company
Los Angeles County Economic Development Corporation
Marin Builders Association