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Tax Incentive Plan to Aid Job Retention Passes Committee

By Susan Britt
Alabama Political Reporter

On Wednesday, the Alabama Job Creations and Retention Act, HB159 and HB160 passed overwhelmingly out of the Economic Development and Tourism Committee.

The bill, sponsored by Rep. Barry Mask (R-Wetumpka), is designed to help manufacturers retain jobs in Alabama by offering a payroll tax withholding incentive. The incentive allows Alabama companies to use a portion of the employer portion of payroll tax to be used for capital investment.

“We need this to compete,” said Chairman Mask. Other states are considering similar incentive programs. Similar legislation in Alabama has included incentive programs that have brought companies such as Mercedes, Honda, Hyundai and ThyssenKrupp to Alabama.

Mask said, “Job one in economic development is retaining what you have got and I think this is going to be a great tool in retention of projects all around the state. We are in a very competitive environment, other states are trying to steal our good paying jobs.”

The program would require a binding contract between the company and the state to include a recapture clause in case the business did not use all of the incentive money.

Although this uses payroll taxes to fund the incentive, employees W-2 forms will not be affected. They will reflect the same as if the employer had paid into the state as usual.

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“Our number one focus is boosting private sector job growth and getting more Alabamians back to work,” Speaker Mike Hubbard said. “We’re leading the nation in reducing unemployment and the state has added more than 41,000 jobs since last January, but we have a long way to go. Too many Alabamians are still without work, and we’re taking action to remedy that.”

The bill, HB 159, will allow the Governor and the Alabama Development Office to have more flexibility in helping companies to remain in Alabama or to encourage other to come to the state of Alabama without calling a special session of the Legislature.

Its companion bill, HB 160, sets the strict parameters for how those incentives can be used to ensure return on investment.

“Working in local economic development myself, I can tell you the best thing we can do jumpstart job growth is to foster a friendly business climate and have a diverse tool kit for pursuing new projects,” said Rep. Mask.

The two bills will be presented on the floor of the House today.

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