Chamber Urges State to Lift Cap on Tax Credits
Chamber Urges State to Lift Cap on Business Tax Credits
Business growth in southeastern Connecticut is being hampered by government restrictions limiting the amount of business tax credits for research and development.
According to the Chamber of Commerce of Eastern Connecticut, companies can earn research and development tax credits by making investments in a skilled workforce, specialized lab equipment and capital projects. This, in turn, would give area employers an incentive to reinvest in opportunities that lead to a more stable workforce and healthier economy.
Unfortunately, the state caps these tax credits at varying amounts between 50-70 percent. Today, the cap is one of the lowest in the region as companies can access just 55 percent of their earned tax credits.
“We have a highly skilled workforce in southeastern Connecticut,” said Tony Sheridan, President and CEO of the Chamber. “However, our economic growth has been slow to materialize. It’s critical that we strike the right balance between our short-term challenges and our long-term investments. Our future success is at stake.”
The Chamber is urging the state legislature and Governor’s Office to support legislation that would allow companies to access stranded tax credits, which were awarded based on significant upfront capital investments.
“We must increase support for industries with strong growth potential such as health care, bioscience and manufacturing” said Sheridan “This would make Connecticut a stronger competitor in the regional race for high-growth industry, while also starting a rebirth in business spending. That's a win-win.”
The ability of companies to access more of their earned tax credits will allow for more investment in the state. For example, Boehringer Ingelheim, the 125-year-old innovative biopharmaceutical company with its U.S. headquarters in Ridgefield and Danbury, reported that in recent years it spent $600 million on capital investments, in part, because of the research and development tax credit program.
Connecticut's construction and labor force, local goods and service vendors, and municipal economies all get a boost from these kinds of investments. In fact, the state's Department of Revenue Services calculates that for every $1 a company earns in research and development tax credit there is a $30 ripple effect in the state economy.
“We feel strongly that if companies can access more of what they have earned then we would be well on our way to being a hub of health care innovation and bioscience breakthroughs that we so often discuss as a state brand,” said Sheridan. “This well-thought-out program has a remarkable return on investment and it should be celebrated and expanded.”
