Relative to raising the research and development tax credit.
Impact
If enacted, SB276 is expected to have fiscal implications for state revenues. The estimated decrease in revenue due to the increased tax credits could reach a maximum of $3,000,000 within the first year. Subsequent years may see indeterminable decreases in revenue as taxpayers carry forward their unused credits over a five-year period. The potential impact on the Business Profits Tax (BPT) and the Business Enterprise Tax (BET) must also be considered, as the R&D tax credit is first applied to the BPT and any unused portions can then be applied to the BET, making accurate forecasting challenging.
Summary
Senate Bill 276 (SB276) aims to increase the research and development (R&D) tax credit within the state. The proposed legislation raises the total amount of tax credits that can be claimed in any fiscal year from $7,000,000 to $10,000,000. Additionally, the bill sets a new maximum credit of $100,000 per entity, up from the previous cap of $50,000. This bill is positioned to foster an environment conducive to innovation and encourage investments in manufacturing research and development by allowing businesses to enjoy a greater financial benefit for qualifying expenditures.
Contention
Notable points of contention surrounding SB276 include the debate over the effectiveness of increased tax credits in stimulating economic growth. Proponents of the bill argue that enhanced tax incentives will spur innovation and competitive advantage in manufacturing sectors, potentially leading to job creation and economic expansion. Critics may express concerns about the financial burden on state-funded services, as decreased revenues could lead to challenges in budget allocations, particularly for public education and infrastructure projects. The balance between fostering economic development and ensuring adequate funding for state services will likely be a focal point of the discussions as the bill proceeds.
Relative to application of the utility property tax to certain renewable electric generating facilities, and relative to communications services tax revenues.