Newsom announces ‘largest state tax cut for small businesses in history’

California Gov. Gavin Newsom smiles as he readies to hold a news conference Tuesday, May 11, 2021, in Los Angeles. Newsom on Tuesday proposed $12 billion in new funding to get more people experiencing homelessness in the state into housing and to “functionally end family homelessness” within five years. (AP Photo/Marcio Jose Sanchez)

On Thursday California Governor Gavin Newsom announced his proposal for what he calls the “largest state tax cut for small businesses in history.” The announcement is a tantalizing one as many across the state continue to weather the final storm brought upon them from the COVID-19 Pandemic.

A recent assessment of the state’s budget revealed a $76 billion surplus that the Governor is planning to immediately dump back into the state in the form on small business relief, rent relief, and yet another round of one-time checks for low-income residents.

According to a press release from the Governor’s office the current small business relief program has already sent monetary relief to198,000 separate business to the tune of $475,001,244 and the new announcement seeks to broaden that investment eightfold. The proposal will expand the COVID-19 Small Business Relief Grant program to a total of $4 billion, which the Governor will compound with an additional $6.2 billion tax cut for businesses affected by the pandemic.

“Our small businesses have faced unprecedented challenges over the past year, and we’re stepping up to meet the moment – making historic investments to provide businesses with the support they need and jumpstarting California’s economic recovery,” said Governor Newsom. “This is money in the pockets of business owners to make payroll and cover the bills as we prepare to fully reopen California’s economy on June 15.”

The Governor also plans to send $600, plus $500 for children, to low-income residents akin to the federal and state stimulus checks from last year.

The state’s surplus is also being used for comprehensive rent forgiveness that will have the state pay all owed back-rent and future rent and utilities for those who qualify.

“CA is providing the largest rental relief program. For those that need it, we will pay your back-rent, your rent for months to come, and your utility bills,” Gavin Newsom said.

Though Newsom does not specify when this incredibly generous offer will end, it seems likely that the offer will likely stand at least until the June 15 landmark reopening date, if not through the rest of 2021.

The Governor’s proposal also included the following investments:

  • Estimated $895 million investment in the State Small Business Credit Initiative (SSBCI), which works to strengthen state programs that support financing of small businesses.
  • Increasing the CalCompetes tax credit program to $360 million, and establishing a one-time $250 million grant program, to incentivize businesses to relocate to California.
  • $250 million investment in California’s ports to address revenue loss and bolster future economic activity.
  • $200 million to expand sales tax exclusions through the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) to promote, grow and incentivize green manufacturing in California.
  • $147 million for the Main Street Small Business Tax Credit to assist small businesses that have hired and retained workers since the second quarter of 2020.
  • $95 million to jumpstart California’s tourism industry, one of the largest economic drivers in the state that was particularly impacted by the pandemic.

On top of all of this, Newsom even announced Friday that “California will eliminate debt owed for traffic fees and fines for low-income Californians. Tickets from 2015 – June 2021 will be forgiven.”

However, all of this is playing out as a conservative-driven recall is rumbling in the background. Despite this, Thursday’s major economic investment of what Newsom calls his “$100 billion California Comeback Plan” is likely to quell even some of his harshest lockdown critics.

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