Recently, a survey of the nations CEO’s that ranked all states in terms of their business environments listed California dead last. Actually, we came in 51st out of the 50 states since they included the District of Columbia. According to Chief Executive Magazine, California has become “the Venezuela of North America”. Maybe that’s why Governor Arnold wears white suits in his TV spots promoting the state.

The reason this is tax newsworthy is because previously I wrote (see previous blog entry California Tax Freebie dtd Jan 7, 2010) about an obscure tax credit available to California businesses who hired new employees in 2009. The credit reduces California income taxes and is calculated based on a formula that compares hours worked for new hires in 2009. The credit is only available on a first come, first served basis until allocated funding is used up. Funding allocated for this employer subsidy was $400 million, and it was expected that credit applications would far exceed that amount. As a result we encouraged many of our clients to file tax returns early so as not to miss out on this giveaway.

Well, it turns out that due to our almost highest in the nation unemployment rate, there apparently haven’t been enough new hires to make a dent in this credit. As of March 20th the state had only allocated about $14 million of the $400 million available. The good news is that you probably have till at least June 30 to file 2009 tax returns and still claim this credit. The bad news is that due to our business climate there probably aren’t many of you that had new hires in 2009 anyway.