SACRAMENTO - The Assembly Revenue and Taxation Committee approved a bill late Monday by Assemblymember Bob Wieckowski (D-Fremont) that could help spark manufacturing jobs in California by placing a measure on the ballot to exempt manufacturing equipment from the state share of the sales and use tax.

Currently, California is one of only three states that impose a sales tax on manufacturing equipment.  AB 218, the Job Retention and Economic Recovery Act, would improve the state's competitiveness by asking voters to eliminate the tax to help generate job growth in the manufacturing sector, which pays employees an average of $25,000 more per year than service-sector jobs.

"Job creation is my top priority and these are well-paying jobs that can help put California back on track," Assemblymember Wieckowski said.  "This bill offers a long-term solution to Gov. Brown's goal in the May Revise to expand job growth by removing disincentives to investing in manufacturing equipment. It would aid both new and existing manufacturing businesses by eliminating this tax."

The Governor's May Revision proposes to create a sales tax exclusion for equipment purchases for those businesses just starting out, beginning in 2012-13. 

Wieckowski's bill would increase jobs and reduce the state deficit because it is paid for with a state estate tax.  In 1982, California's voters repealed the inheritance and gift tax but allowed an estate tax tied to a federal tax credit to be implemented. Known as the "pick up tax," it gave Californians a credit on their federal estate taxes for the amount paid on their state estate taxes. It became one of the largest sources of state general fund revenue before the federal government passed the Economic Growth and Tax Relief Reconciliation Act in 2001.  That act phased down and eventually eliminated the credit in 2005 and, thus, the pick-up tax disappeared. 

Twenty-three states have their own estate or inheritance tax, many created after the federal government's actions in 2001. 

Revenue from AB 218 would also fully fund the Williamson Act to protect farmland in California. It would also exempt agricultural real and personal property from the estate tax if the property value exceeds 50 percent of the estate's value.

If approved by the Legislature, AB 218 would go before voters because it amends Prop. 6 from 1982. The bill is currently before the Assembly Appropriations Committee and will be voted on May 27. 

Wieckowski, chairman of the Assembly's Environmental Safety and Toxic Materials Committee, was also named co-chair of the Select Committee on California's Clean Energy Economy.  He is carrying legislation to expand job creation for small businesses, California's biotech industry and clean technologies.

CONTACT: Jeff Barbosa, 916-319-2020