Report: Enterprise Zones Hide Tax Credit Information from Public

A stunning KCRA (Sacramento) investigative report on Tuesday revealed that strip club owners are among the recipients of taxpayer dollars under the state’s broken enterprise zone program. Last night, in part two of the exposé, KCRA revealed another major flaw of the EZ program: it’s shrouded in secrecy, giving the public no opportunity to see where their tax dollars are going, or whether the program is creating any jobs for the annual $750 million investment we’re making.

From the KCRA report:

Tax credits are available to businesses in 40 enterprise zones across California. But despite the money coming from taxpayer dollars, the state won’t reveal online who receives it.

In California’s fragile economy, every dollar counts. But a KCRA 3 investigation has revealed that hundreds of thousands of tax dollars are supporting strip clubs.

Mark Boyles gets a $37,000 tax credit for every server he hires at his Gold Club Centerfolds strip club in Rancho Cordova.

“We had several companies call us and said, 'You’re in an enterprise zone,'” Boyles told KCRA 3.

The tax consultants told him, “We want to do your paperwork, and you're going to make a lot of money,” according to Boyles.

And he is making a lot of money, thanks to Innovative Tax Solutions, on J Street in Sacramento.

Innovative Tax Solutions, and others, look for businesses that qualify for tax breaks, fill out the paperwork for them and get a cut — but finding out which companies benefit isn’t easy.

The California Labor Federation has a problem with that.

“This is a secret program, and taxpayers can’t see where their dollars are going,” said Sara Flocks, policy coordinator for the federation.

When it comes to corporate tax breaks, transparency is essential. Many states provide online databases that allow the public to see exactly where corporate tax credit programs (like enterprise zones) are sending their tax dollars. But in California's enterprise zone program, transparency is nonexistent.

It’s absurd that a program that costs our state hundreds of millions of dollars each year — funds that could be going to our schools, infrastructure and real job creation programs — is neither transparent nor accountable to its intended purpose of creating jobs. Yet, that’s the enterprise zone program in a nutshell. 

Many big corporations, strip clubs owners and other recipients (along with their high-paid lobbyists) think that it’s none of our business where the EZ money goes. We disagree.

As Flocks told KCRA:

It’s taxpayer dollars. It’s our business.

Enough is enough. Legislators need to stop this mess of wasteful spending before another dollar of taxpayer money goes down the drain.

Contact your legislators today to tell them to reform EZs now!