Legislative Update - Jan. 14, 2016
It only took a day after the first gavel drop of 2016 for the General Assembly to contemplate serious corporate income tax reform with a House committee approving such a bill by a wide margin.
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 is 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,” said Matthews.
He also doesn’t like that it’s going to cost the state nearly $50 million to phase 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 DEFAC committee’s revenue neutral mandate,” Matthews said.
That had been the intention of the Delaware Economic and Financial Advisory Council 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.
House Democratic Leadership intends to call for a vote on the bill if it’s released from an appropriations committee this afternoon.
Another bill that could get a vote tomorrow also passed out of a committee earlier Wednesday afternoon.
House Majority Leader Valerie Longhurst (D-Delaware City) wants to create a new initiative to hand out grants to after school programs in public schools with low income students.
“Over the last year we’ve taken music, arts and all those special programs out of the school day and this is an opportunity that the enrichment program could provide that as an addition to the children’s day,” said Longhurst.
Kids would get help with homework from certified teachers, get an extra meal and, she hopes, reduce juvenile crime as a result of it.
Longhurst has asked for a $10 million price tag at first to fund the programs. A state analysis shows for every ten percent of Delaware’s student population that participates, it would cost $7.4 million a year.
That cost is part of the reason Republicans are hesitant to support it.
Rep. Mike Ramone (R-Middle Run Valley) says he’s also concerned new school based programs would draw kids away from already established ones elsewhere.
“The worst case scenario is a year or two from now, our YMCAs, our [Boys and Girls] clubs, our PAL centers all have such a small amount of people they can’t continue to offer their service,” said Ramone.
The bill must now also go through an appropriations committee before the whole House can vote it on.