A bipartisan effort to restructure Delaware’s corporate income tax is charging forward as the state legislature prepares to reconvene this week.
Backed by Gov. Jack Markell’s (D) office and leaders of both parties, the bill would streamline the current system to only factor in how much a company’s sales are worth.
Right now, the state factors in how much property companies own in Delaware and their local workforce.
Finance Secretary Tom Cook says the current system hinders economic development by making companies pay more by expanding their footprint or hiring more people.
Despite the estimated $48.7 million it’s expected to cost over the next three years as it's phased in, Cook says it could spur job growth.
“So, in turn, through the collection of payroll taxes, construction jobs and so forth, that could be certainly offset in the future,” Cook said.
Neighboring Pennsylvania and New Jersey only count sales and Maryland is shifting their system that way at the moment.
“If the surrounding states are heading towards that way, certainly, we would be at a competitive disadvantage," he said.
The bill would also allow companies earning under $20 million in annual sales to pay 25 percent of their tax estimates each quarter instead of 70 percent for the year by June 1.
The bulk of the bill came as a recommendation by a task force that analyzed Delaware’s revenue system last year to make it more responsive to the state economy.
Recommendations from the group have largely been overlooked up to this point legislatively, but Cook says more may show up at the General Assembly this year.
The House Revenue and Finance Committee will take up the proposal Wednesday afternoon.
