A proposal to expand the job creation tax credit is floating around the state capitol, and it has one very influential supporter: Gov. M. Jodi Rell.
The governor testified earlier this month at a commerce committee public hearing in favor of the idea as part of her goal to spur economic development.
The current job creation tax credit program was created in 2006 and broadened by the legislature in 2007. It allows C-corporations — categorized by the Internal Revenue Code — that create at least 10 new net jobs in a year to claim a credit equal to 60 percent of each new employee’s state withholding tax.
The new proposal would expand the credit to all businesses and lower the threshold for creating jobs to just one.
In her written testimony, Rell said that small businesses are responsible for creating the majority of new jobs and that is why she wants the credit to be available to IRS-categorized S-corporations, LLCs, LLPs and LPs.
Stimulus Package
“This incentive will send a strong message that Connecticut welcomes entrepreneurs and nurtures the small businesses, which are at the heart of our economy,” she said.
Democrats have pushed for an economic stimulus package as a way to encourage more investment and help small businesses.
Senate Republicans, who initially made the new proposal in January, also testified in favor of the bill as part of their Jobs Growth Initiative, which includes a proposal to repeal the business entity tax.
The Connecticut Business & Industry Association is supporting the proposal because of its benefit to small businesses.
“Most businesses don’t add 100 jobs or 50 jobs at a time,” said Bonnie Stewart, vice president of government affairs for CBIA. “Small businesses may add four or five at a time and grow in waves.”
Despite the support, it is no lock that the proposal will be approved or even emerge from the commerce committee in its present state.
Based on rumors she heard around the capitol, Stewart believes the bill will eventually be amended to set the jobs-creation threshold at two or three.
“We also understand that the state could be heading towards more trying economic times,” she added. “We’ve asked the commerce committee to move the bill out of committee and wait until the end of April. We can evaluate then and see if it should still be supported.”
