Genentech layoffs: A lesson on corporate tax breaks

[n2doc]

The Bay Area biotech giant lobbied against Proposition 24, saying tax breaks it aimed to repeal would save jobs. Shortly after the measure's defeat, the firm said it would layoff 840 workers.

By Michael Hiltzik
December 7, 2010, 7:56 p.m.

Dear California voters:

Are you feeling rooked yet?

The question arises in connection with a recent announcement by the parent of Genentech, the big Bay Area biotech company, that it will be laying off 840 employees in San Francisco and Vacaville, Calif.

Normally it would be routine to chalk up the announcement to California's supposedly hostile atmosphere for business, its unforgiving corporate tax system, etc., etc. What makes it a lesson of a different sort, however, is that it came two weeks after the state's voters went out of their way to preserve a handsome corporate tax break that Genentech insisted would save jobs.


Gov.-elect Jerry Brown and his legislative colleagues should take this as a warning. There's nothing inherently wrong with handing out tax cuts to business to spur growth. But they should be tied to specific performance by the beneficiaries. You say corporate taxes hurt job growth? Fine — we'll give you a tax break for net new hires. After all, tax breaks aren't free — every dollar cut for one class of taxpayers increases the burden on everyone else. (California does offer a hiring tax credit, but the program is tiny.)

Instead, California consistently awards tax breaks to business and gets nothing in return.

more

http://www.latimes.com/business/la-fi-hiltzik-20101207,0,376910.column

[quaker bill]

1. Because taxes are not the reason

people are hired or laid off. The rates are generally so low in this country as to be in fact irrelevant.