Corruption never looked so good.
Government favored strip clubs, a casino and Fortune 500 firms
get tax breaks while "non-approved" businesses have to
pay the full tax bill.
A rare glimpse into an embattled California tax credit program shows that Fortune 500 companies – and one casino – are its biggest beneficiaries in Sacramento County.
The state enterprise zone program offers businesses up to $37,440 in tax credits per employee as an incentive to hire workers in economically depressed areas. But the credits have come under fire from Gov. Jerry Brown and labor groups who claim they are ineffective and direct money away from more desperate state needs.
Many enterprise zone administrators, relying on advice from a state attorney, have refused to disclose which businesses use the tax credit program, citing taxpayer confidentiality.
But a Sacramento joint powers agency and West Sacramento last week provided data showing which companies claim enterprise zone vouchers in their areas reports the Sacramento Bee.
An assortment of fast-food restaurants, manufacturers and retailers are on the lists. So are two strip clubs in Rancho Cordova, which have claimed a combined 24 vouchers dating back to 2010. Opponents have seized on that fact to assail the program.
About 500,000 tax vouchers have been issued since 2009, according to the state Department of Housing and Community Development, the agency that oversees the program.
In Sacramento County alone, shipping giant FedEx has obtained 1,382 tax vouchers since 2010, by far the largest recipient, according to documents obtained by The Bee. AutoZone, a national auto parts retailer, ranked second with 159.
FedEx listed several office addresses and has a distribution center on Elder Creek Road in Sacramento. In a written statement, FedEx said the program "serves an important purpose in helping bring business and jobs into areas of California."
Shipping competitor United Parcel Service has its own distribution center in West Sacramento's enterprise zone and claims tax credits there. But West Sacramento did not provide the total number of vouchers companies obtained in its enterprise zone, which includes most of the city save for its newer Southport neighborhood.
Enterprise zone foes have questioned why large corporations are getting the tax credits. In 2009, companies worth at least $1 billion received 68 percent of those credits, according to the Franchise Tax Board.
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| "My boss gets a big tax break." |
Capitol Casino officials did not respond to repeated requests for comment.
In Rancho Cordova, strip clubs Gold Club Centerfolds and Deja Vu Showgirls used 24 credits to hire waitresses, disc jockeys and security guards.
But Terri Carpenter, spokeswoman for the Sacramento Employment and Training Agency that administers the program in Sacramento County, said her agency doesn't determine who can receive the vouchers.
"If they are eligible, we process it. We follow the letter of the law," Carpenter said.
Though SETA and West Sacramento responded to The Bee's request for information, administrators for the Yuba-Sutter and San Joaquin enterprise zones declined to disclose their voucher lists, citing program rules and taxpayer privacy laws.
Aside from new hires, the enterprise zone program allows employers to retroactively claim credits for former and current employees. Critics contend that has given rise to a cottage industry of tax consultants who solicit businesses, promising to unearth unused tax credits from the past.
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| Fortune 500 Tax Breaks Well connected businesses like FedEx have tapped into tax break programs that are kept secret from the public. These Government "favored" businesses get a tax break and a free ride while other businesses must pick up the rest of the tax bill to support police, schools, parks and fire services putting them at a competitive disadvantage. |
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| Top Secret Enterprise zone administrators have refused to disclose to the public which businesses use the tax credit program. |
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