Vote Smart's Synopsis:

Vote to pass a bill that authorizes companies to retain a percentage of state income taxes withheld from eligible employees.

Highlights:

• Authorizes the Governor to have the sole authority to approve companies and projects to receive income tax benefits upon the recommendation of the Alabama Development Office (ADO) Director and the Director of Finance (Secs. 2 & 3).

• Authorizes a company to retain income tax withholdings that are a percentage of the state income taxes withheld from eligible new employees on qualifying projects (Sec. 5):
• For new or expansion projects:
• Outside “favored” geographical areas:
• Up to 50 percent for companies that employ 50 to 250 employees; or
• Up to 90 percent for companies that employ more than 250 employees;
• Within “favored” geographical area:
• Up to 50 percent for companies that employ 25 to 150 employees; or
• Up to 90 percent for companies that employ more than 150 employees; or
• For retention projects:
• 1 to 75 percent.

• Defines “eligible employee” as an individual that works at least 36 hours per week and only on the company’s qualifying project (Sec. 3).

• Defines “qualifying project” as either a new, expansion, or retention project (Sec. 3).

• Specifies that new or expansion projects include, but are not limited to, the following (Sec. 3):
• A data processing center;
• A research and development facility; or
• A project that consists of industrial, warehousing, or research activity.

• Requires that retention projects include the following criteria (Secs. 3 & 5):
  
  • Outside “favored” geographical areas:
  • Capital investments of at least $2 million; and
  • More than 80 percent of eligible employees are retained for at least 5 years; and
  • Inside “favored” geographical areas:
  • Capital investments of at least $500,000; and
  • More than 67 percent of eligible employees are retained for at least 5 years.

• Prohibits income tax withholding benefits from being provided without the approval of the State Industrial Development Authority (Sec. 8).

Full Bill Text