RANCHO CORDOVA (CBS13) — Two strip clubs are taking center stage in a tax-policy debate.
At issue are enterprise zones. They're part of a program from the 1980s to spur economic development in troubled areas.
A state senator pushing for reform says Deja Vu Showgirls and Gold Club Centerfolds are using what he calls a loophole, allowing a $37,000 tax break for each employee.
"It was intended to do a good thing, but the problem is it has been gamed," said Sen. Jerry Hill (D-San Mateo).
But he says it's not just strip clubs cashing in on the breaks.
"A lot of this is going to Walmart, Fed-Ex—large corporations that move not because of tax credits, but because they want to go to that area."
According to the Association of Club Executives—the national group that oversees nightclubs—Deja Vu is being unfairly targeted.
"The enterprise zones landed on these clubs that were already there," said Matt Gray. "A business is a business. It employs people legitimately, and I think the employees are more than happy to pay their rent and put food on the table like anyone else."
Sen. Hill says his reforms would close the tax loophole, and make sure businesses getting the breaks are creating new jobs—something he says isn't happening now.">
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