Has the Longer Test Seriously Harmed California Industries?
Even if the one-year test is more appropriate from a tax policy perspective, the question remains as to whether the change from a 90-day test to a one-year test has had an unduly harsh impact on the industries affected. As we reported above, it is likely that the extended one-year test has had some adverse effects on Californias yachting and RV industries. In instances where the state is competing with other states and countries for business, the Chapter 226 changes could also have adverse effects on Californias competitiveness. The initial data we have observed, however, suggest that these effects have not been particularly large.
