IMPLEMENTATION LEVEL

Subnational

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 20 Jul 2014 | Removal date: open ended
Still in force

Tax or social insurance relief

The governor of California signed into law on July 20, 2014 a bill (AB2389) that grants a tax exemption to the Lockheed Martin Corporation. The precise terms of the bill make no reference to a specific company, and are instead written in a generic fashion. The bill modifies the current capital investment incentive program for local governments and allows a tax credit under the Corporation Tax Law to a qualified taxpayer in an amount equal to 17.5% of qualified wages paid by the taxpayer during the taxable year to qualified full-time employees. According to critical accounts in the press, however, this amounts to a $420-million tax break and 'a sweetheart deal for Lockheed' that moved through the legislature 'only after critics forced state officials to pledge that they would seek a similar incentive for aerospace rival Northrop Grumman.'

According to the Los Angeles Times, at issue is a $55-billion Air Force contract to build next-generation bombers, and that Lockheed - which would be a major subcontractor to Boeing on the project - 'sought the tax credit to help make the Boeing bid more attractive to the Pentagon.' In response to criticism that this benefit would be extended to just one company, 'Gov. Jerry Brown and Assembly Speaker Toni Atkins (D-San Diego) publicly pledged to grant a similar benefit to Northrop.'

 

AFFECTED COUNTRIES

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TABLE
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AFFECTED SECTORS AND PRODUCTS

496 Aircraft & spacecraft; parts
8802 Other aircraft (for example, helicopters, aeroplanes); spacecraft (including satellites) and suborbital and spacecraft launch vehicles.
880211 Of an unladen weight not exceeding 2,000 kg
880212 Of an unladen weight exceeding 2,000 kg
880220 Aeroplanes and other aircraft, of an unladen weight not exceeding 2,000 kg
880230 Aeroplanes and other aircraft, of an unladen weight exceeding 2,000 kg but not exceeding 15,000 kg
880240 Aeroplanes and other aircraft, of an unladen weight exceeding 15,000 kg

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