DOVER – The Delaware State Senate voted 19-0 today in favor of updating an underutilized economic development tool in an effort to spur additional job creation in the First State.
Sponsored by Sen. Jack Walsh, D-Stanton, Senate Bill 74 seeks to modify the New Economy Jobs Tax Credit, a tax incentive that has seen little use since it was created in 2007.
“The credit is designed to help attract big employers and large numbers of high-paying jobs, which is what we all would like to see,” Walsh said. “Unfortunately, the fine print in the law is keeping companies from using it, which really defeats the purpose. With a few minor tweaks, I think this credit will finally produce the jobs it was meant to attract.”
The New Economy Jobs Tax Credit offers a 10-year tax break based on the number of jobs created and the salary those positions pay, as determined by an indexed salary threshold. To qualify now, a company would need to create 50 jobs that pay a salary of about $120,000 or 200 jobs with an average salary of $70,000.
However, the credit as currently constructed requires those companies to add all of those new jobs in a single calendar year. SB 74 would change that provision to a 12-month period that could extend over two calendar years.
The measure also would move the timing of the annual salary threshold adjustment to provide businesses with greater certainty about the incentive being offered.
It further protects taxpayers by disqualifying companies who fall below certain employment thresholds for two consecutive years.
And it streamlines the administration of the tax credit, which is currently counted against the bank franchise tax, the insurance premium tax, the corporate income tax and “other taxes and fees” imposed under Title 30 of the Delaware Code – in that order.
SB 74 would replace “other taxes and fees” with the personal income tax and make the credit refundable only against one of those four taxes.
The changes are backed by Gov. John Carney and the Delaware Prosperity Partnership, a public-private partnership that leads the state’s economic development efforts.
The legislation now heads to the House for a final vote.