California has signified success and prosperity for more than a century. Anyone with a dream came here to make it a reality. Innovators, creatives, and business tycoons alike have found opportunity in the Golden State and now, more than ever, it is imperative that we support these trailblazers toward a brighter future.
In its 2023 State Economic Competitiveness Index, the American Legislative Exchange Council (ALEC) ranked California 45 of 50 states in its assessment of the state’s overall competitiveness and economic outlook. The Tax Foundation listed California as 48 of 50 in its annual State Business Tax Climate Index. Chief Executive’s yearly Best & Worst States survey of CEOs for 2023 noted California at 50. According to a 2021 report released by the Hoover Institute, “California business headquarters left the state at twice their rate in both 2020 and 2019, and at three times their rate in 2018.”
The California Manufacturers & Technology Association is dedicated to enhancing a strong business climate for the state’s more than 30,000 manufacturing, processing, and technology-based companies. Our mission is to collaborate with state government to develop sound policies that stimulate economic growth and create new jobs in California. We believe a manufacturing tax credit is a first step in the right direction.
Small and medium-sized manufacturers account for 70% of California’s output. It generates more than $300 billion annually and employs more than 1 million workers in the state. Aerospace manufacturing is particularly important. More than 510,000 Californians work in the industry, creating more than $62 billion in revenue – more than the state’s agriculture and arts and entertainment industries combined. The Aerospace & Defense Alliance of California (ADAC) notes that the state’s aerospace industry generates $7 billion in state and local taxes.
This incredible impact includes commercial, space, and military aerospace manufacturing, from aviation startups in Silicon Valley to the concentration of the cutting edge in Palmdale to satellite production around Los Angeles. One of the state’s successful manufacturing stories is the KC-46 Pegasus. Utilized by the U.S. Air Force as the service’s leading refueling tanker, the KC-46 program supports more than 170 California-based supplier companies, 5,000 jobs, and over $300 million in annual estimated economic impact.
These small and medium-sized California businesses are not only creating jobs, but also supporting programs that increase positive economic growth while supporting service members who utilize the KC-46, including the military personnel at Travis Air Force Base in Northern California.
A manufacturing tax credit would assist our manufacturers who are building the future of national defense by supporting programs like the KC-46. It would help California innovators who are developing new green technologies. It would ensure home grown talent would stay in our state, build their businesses and careers here, and contribute to the state’s economic success.
California leaders have a critical opportunity to catalyze a positive economic turnaround for the state. By prioritizing investments in our businesses through tax credits and demonstrating unwavering support for vital manufacturing programs, we can proactively steer the state away from potential financial challenges and towards a path of sustainable growth and prosperity.
Lance Hastings is the President and CEO of the California Manufacturers & Technology Association.
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