ANNOUNCEMENT 20 Jul 2014In July 2014, announced a targeted tax change.
NUMBER OF INTERVENTIONS
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.'