Arizona Senate Bill SB1562

Arizona 2023 Regular Session

• Introduced: 2/1/23
• Report Pass: 2/16/23
• Report Pass: 2/23/23
• Report Pass: 3/6/23

Caption

Research; development; tax credits

Impact

If enacted, SB 1562 will significantly alter the landscape of tax credits available to businesses engaged in research and development. It sets a structure by which unused tax credits can be reinvested back into Arizona’s economy, thus potentially enhancing economic growth and innovation. The legislation proposed an allocation of $50 million for these purposes, aiming to stimulate sectors critical for state development, such as water sustainability and workforce initiatives. The bill's design focuses on small businesses, particularly those with fewer than 150 employees, making it a targeted approach towards boosting local enterprises involved in research.

Summary

Senate Bill 1562, known as the Arizona Reinvestment Fund Act, aims to amend the Arizona Revised Statutes by introducing provisions for the reinvestment of unused income tax credits for increased research activities. This legislation allows taxpayers who carry forward unused tax credits to apply for reinvestment opportunities that can contribute to sustainability projects, workforce development, and advances in education through partnerships with institutions of higher learning. The bill outlines specific criteria for qualification, including deadlines for applications and parameters for funding appropriations, thereby fostering a framework that promotes research activities in the state.

Sentiment

Reactions to SB 1562 have been mixed among lawmakers and stakeholders. Proponents argue that the bill represents a strategic step towards incentivizing research and supporting local businesses by allowing them to utilize previously unclaimed tax credits for significant reinvestments into their operations. The sentiment is generally positive among business advocates and economic development entities who view these credits as essential in enhancing the state’s competitive edge. However, concerns have been raised regarding the potential for misuse or complications in the application process, especially with the first-come, first-served basis for funding distribution, which critics argue may disadvantage smaller entities.

Contention

Notable points of contention include the specific limitations placed on the application of reinvested funds. Critics raise concerns over the relevant encapsulations of what constitutes an appropriate use of the funds, and whether the oversight by state authorities will be sufficient to prevent misallocation. There are also apprehensions regarding the long-term impacts of implementing these tax credits and reinvestment strategies, with calls for more thorough economic analysis to assess outcomes post-implementation. Furthermore, the retroactive application clause raises questions about the effective timeline for beneficiaries to utilize these credits.