Tax Candi

• Economic Development that benefits us all --  Jim Beammoves 120 jobs to Kentucky to consolidate bottling operations and get $6.3 million to help! (Louisville BizJournal)

• Kentucky also is trying to keep Harley-Davidson in state, so the governor is considering calling a special session to discuss possible incentives.  (And for 2,000 jobs, who wouldn't?) 

• Pfizer  (and its 1,400 jobs) are leaving the New London, the project and the town in the landmark Kelo case that turned "economic development" into a four-letter word. (New York Times)

I am a woman, therefore, it almost goes without saying that shopping is a favorite pastime.   Growing up in Dallas, and now living in Chicago, I've always enjoyed great shopping opportunities. 

Now, Chicago has two substantial disadvantages from Dallas: 

1. Walking around Magnificent Mile is unpleasant due to weather for 3/4 of the year, and
2. a 10.25% (9.75% come July) sales tax.

Today, Cook County helped lessen consumer's burden, the county also passed an incentive just over a year ago to attract and maintain major retail projects called, fittingly the...

Cook County Retail Economic Development Incentive

The incentive is fairly easy to understand and compute:  In order to entice major retailers (or shopping centers) to locate within Cook County, rather than locating to a collar county with significantly less tax rates, Cook County and the municipality can rebate a portion of their sales tax revenue from the project with the retail.  (Cook County's participation is dependent upon the city's.)

 The portion rebated is negotiated, and the process to apply for this incentive is rather lengthy (much like the Class 7B property tax abatement).  Cook County's Department of Planning and Economic Development oversees the applications, and they require a number of analysis, including a persuasive argument that without the sales tax revenue rebate, the project would not locate within Cook County.  (But retailers, since you're not actually paying the sales tax out of your own pocket, its really no skin off your nose to collect an extra 2+% from your customers and recieve up to 50% of that back!)

Eligible companies must demonstrate that they will create or maintain jobs and increase sales tax revenue.  Additionally, the rebated money cannot go back into profits, but instead must be used to pay for improvements, expand operations, or increase inventory, etc. 

Ohio is home to a number of interesting things - the Rock and Roll Hall of Fame, a pennant-shaped state flag, and the first traffic signal system in America.   They also have a robust economic development program for investments, job retention and job creation; so, let's take a look at Ohio's...

Job Creation Tax Credit

The key things about Ohio's the Job Creation Tax Credit ("JCTC") is a refundable tax credit for new full-time jobs created pursuant to an application to and subsequent agreement with the Tax Credit Authority.  Yes - refundable (Excellent in this economy).  The credit is equal to an agreed-to percentage of the new employees' Ohio income tax withholding during the taxable year. 

To be eligible, a company must create at least 25 net new jobs and their salaries must be 150% of the federal minimum wage (so, $11.25).

The proposed municipality must provide an incentive as well.  As part of the required location portion, the municipality may also grant a nonrefundable tax credit against the municipal income tax (double bonus!).

Interested parties must contact and provide a rather lengthy application to Ohio's Department of Development.

• Boeing diversifies its domestic operation locations, heading to South Carolina to make 787s.  Gov. Mark Sanford signed the $170 million incentive package, comprised of low-interest financing and sales tax exemption (AP)

• Ohio keeps Intelligrated, a supplier and manufacturer of automated material handling solutions, from relocating Kentucly with a $24 million incentives package.  The package is a mix of financing and Job Creation Tax Credits. (The Madison Press)

• And just for laughs, Funwith Google's search suggestion feature. (Slate)

Fall is definitely in the air (or is that winter)?  So, let's jaunt down the eastern coast to warmer climates...

Georgia Investment Credits (Standard, Port and Optional)

The standard Georgia Investment Tax Credit (ITC) ranges from 1% to 8% of qualified capital investments made by eligible companies.  The Percentage of ITC depends on the project county's tier level (of which there are three).  The ITC is available to:

• Existing manufacture or telecommunications business that
• Already operates a facility in Georgia
• And has done so for at least the 3 years prior to the investment, and
• Invests at least $50,000.

(Note: Higher level credits of 3% to 8% are given for investment in recycled equipment, pollution control equipment, and for certain plan conversions.) 

The ITC can be used against up to 50% of income tax liability in a given year and may be carried forward 10 years. AND companies pursuing the ITC are barred from also recieving the Jobs Tax Credit.

The Port Investment Bonus an alternative investment tax credit available to taxpayers with large shipments in or out of a Georgia port.  The port bonus increases the investment tax credit to 5% of qualified capital investment costs, regardless of project county tier level.  Since the 5% is in lieuof the investment tax credit, companies need to negotiate to see what the standard ITC would be higher first.  The port investment bonus is limited to 50% of income tax credit liability in a given year and may be carried forward 10 years. 

The Optional Investment Tax Credit can be taken in lieuof the Investment Tax Credit, as well.  The credits range from 6% to 10% of qualified capital investment cost depending on the project county's tier.    All requirements for this credit are the same as the ITC, except the minimum investment determined based on the tier of level of county, ranging from $5 to $20 million. The credit may be claimed up to 10 years.  The Optional Investment Tax Credit equals 90% of the difference between (1) the taxpayer’s Georgia income tax liability for the current year and (2) the taxpayer’s base tax liability. 

Companies interested in pursuing any of these credits should contact the Georgia Department of Economic Development.