CA Lawmakers Encourage Business Recovery With Tax Breaks
Last Monday, California lawmakers sent their governor a bill proposing up to $6.2 billion in tax breaks on PPP loans for small businesses. This will be the last part of the COVID-19 economic recovery package worth around $9.6 billion.
Since the pandemic has started, Congress has approved three relief packages, the first of which was delivered last fall, followed by more aid in December.
This latest bill will allow California businesses to circumvent the state taxes on loans from the federal Paycheck Protection Program. According to state officials, the bill should apply to up to 85% of California businesses that have received about $96,700 each: A combined $97 billion in federal loans.
Business leaders have supported the tax break, including the California state director of the National Federation of Independent Business, John Kabateck. He also said, “Small-business owners shouldn’t be penalized for taking federal support when businesses were adversely impacted by government shutdowns to deal with this terrible pandemic.”
Senator Patricia Bates of Laguna Niguel confirmed that she is also in favor of the aid: “With California supposedly enjoying a budget ‘surplus,’ it makes no sense to penalize small businesses for accepting federal assistance — especially since the feds have made such assistance fully tax-deductible.”
The bill’s estimated cost will be between $4.4 billion and $6.8 billion, spread across the next six years. The final cost of the package will depend on the excused loan percentage.
California Senate President pro Tempore, Toni G. Atkins, said that these measures are a part of the state’s strategy to help speed up the recovery. “California’s businesses helped get us through the COVID-19 crisis, and now that we are emerging out the other side, we must ensure that they have the financial tools they need to rebound stronger than ever,” Atkins added.