House committee okays corporate income tax bill
Legislation carrying a big price tag to change Delaware’s corporate income tax structure could see a full House vote Thursday.
The House Revenue and Finance Committee approved the bill nearly unanimously late Wednesday afternoon with only one vote against it. The bill would cost nearly $50 million over the next three years as it’s phased in.
Business leaders and groups have applauded the bill in recent days, saying it will modernize the state’s tax structure.
What it will do is calculate how much tax to charge a company solely based on its annual sales.
Right now, Delaware also adds in how big a corporation’s local workforce and how much property they own in the state.
Rep. Sean Matthews (D-Talleyville) was the lone no vote. He says he doesn’t agree with this kind of a piecemeal solution, plucking this single idea from a larger slate of recommendations from a state task force last year.
“I think this is more of a race to the bottom. We have to do it because other states do it. I don’t view it as economic development, I view it as cutting corporate taxes,” Matthews said.
"There’s a climate of corporate extortion in the United States pitting state against state," added Rep. John Kowalko (D-Newark), saying he wouldn't vote for the bill if it comes to the full House.
Matthews also doesn’t like the $50 million bill hitting the state as it's phased in over the next three years.
“I just think it’s important that we replace the revenue that we’re giving away. I think a lot of the parts of the bill regarding small business makes sense and I would’ve been supportive had we tacked on a way to fill and a way to honor the [Delaware Economic and Financial Advisory Council] committee’s revenue neutral mandate.”
That had been the intention of the DEFAC committee that came up with the recommendation.
The bill is part of a bigger narrative playing out in the First State as it tries to keep some larger corporations within it borders.
DuPont spun off Chemours last summer and it immediately announced layoffs and the closure of its EdgeMoor plant.
When DuPont announced it was merging with fellow chemical giant Dow, it also said they’d split into three companies.
One will stay in Delaware, another in Michigan, but the agricultural offshoot still needs a home and state officials are doing all they can to keep it somewhere in the First State.
"If we do nothing, we certainly have the potential to lose more money," said Finance Secretary Tom Cook.
House Democratic Leadership intends to call for a vote on the bill if it’s released from an appropriations committee Thursday afternoon.