HARTFORD – Governor M. Jodi Rell today submitted written testimony to the General Assembly’s Commerce Committee in support of a Senate Republican proposal to expand Connecticut’s job creation tax credit program (HB.  The program was created by Governor Rell in 2006 and broadened by the legislature in 2007.  It currently allows C-corporations that create 10 or more net new jobs in a year to claim a credit equal to 60 percent of each new employee’s state withholding tax.  In January, Senate Republicans proposed expanding the credit to small businesses and applying it for all net new jobs.

An excerpt from Governor Rell’s testimony:

“This incentive will send a strong message that Connecticut welcomes entrepreneurs and nurtures the small businesses which are at the heart of our economy.

“Some in the General Assembly have called for a so-called economic stimulus package, a ‘sound-good’ proposal without much detail about where the money would come from or who it would go to.  However, we do not have a surplus yet – it is only on paper.  So taxpayers should be wary about such a proposal because they will pay its cost – if not now, then in future tax increases.

“By contrast, the $10 million investment in an expanded Job Creation Tax Credit this year would return approximately $25 million in income tax revenue next year.  This is a fiscally-prudent, long-term investment in middle class jobs and in the future strength of the Connecticut economy.”

State Senate Minority Leader John McKinney (R-Fairfield) thanked Governor Rell for her support.

“The people of Connecticut are fortunate to have Governor Rell’s common sense leadership and commitment to fiscal responsibility during these uncertain economic times,” said Senator McKinney.  “Governor Rell recognizes how important small businesses are to Connecticut’s long-term economic security.  The Senate Republican Caucus looks forward to working with Governor Rell and legislators from both parties to help small businesses create jobs and grow our economy.”

State Senator Dan Debicella (R-Shelton), ranking member on the General Assembly’s Commerce Committee, and co-author of the Senate Republican Jobs Growth Initiative also welcomed the Governor’s support.

"Small businesses are the engine of our economy.  Expanding the jobs creation tax credit to them will not just help the economy in the short term, but help drive Connecticut's economy for years,” said Senator Debicella.  “Governor Rell recognizes that we need more than short-term fixes.  We need long-term incentives to create jobs in Connecticut.”

Expanding the Job Creation Tax Credit was a key component of the Senate Republican Jobs Growth Initiative introduced in January.  The four-part initiative aims to grow the state economy by helping small businesses create new jobs (HB 5780), eliminating counterproductive regulations (SB 399), repealing the business entity tax (SB 400) and attracting new “next generation” industries to Connecticut (SB 401).  Governor Rell’s budget proposal also calls for eliminating the business entity tax and investing in emerging industries such as nanotechnology.  The Commerce Committee held public hearings this week on each of the proposals. 

State Senator Len Fasano (R-North Haven) testified Tuesday in support of SB 401 AAC A Study of Next Generations Industries Tax Credit Program and State Senator John Kissel (R-Enfield) testified today in support of SB 400 AAC Eliminating the Business Entity Tax.  State Senator David Cappiello (R-Danbury) submitted testimony today in support of those proposals, as well as HB 5780 AAC the Job Creation Tax Credit and SB399 AAC Regulatory Relief for Small Businesses.

The Senate Republican Jobs Growth Initiative includes:

• Expanding the Job Creation Tax Credit to Small Businesses:  Under existing law passed in 2007, the credit is available to Connecticut C-corporations that create 10 or more net new jobs in a year.  Qualifying businesses approved by the Department of Community and Economic Development (DECD) receive a tax credit equal to 60% of each new worker’s state withholding tax. 

Senate Republicans are working to extend the benefit to all businesses, eliminate the need for DECD approval, and apply the credit annually for every net new job created.  The proposed law would take effect July 1st making the credit applicable to income years commencing on or after January 1, 2008.

• Repealing the Business Entity Tax Effective January 1, 2008: Republicans have been working to abolish the $250 annual “tax on existing” since its inception in 2002, most recently as part of the 2007 No Tax Increase Budget Proposal.  A Republican amendment that included the elimination of the business entity tax failed last year on a 12-24 party-line vote in the Senate.  A similar amendment failed in the House.

• Bringing Business Sense to Regulation: Over the years, a lack of oversight has resulted in a growing number of unnecessary, costly and often redundant business regulations.  This has created a bureaucratic maze in which business owners have to seek multiple permit approvals from multiple uncoordinated state agencies, for the same project. 

In an effort to make this process more efficient, Senate Republicans are proposing DECD conduct a cost/benefit analysis of all existing regulations every five years.  When it is determined that a regulation’s societal cost outweighs its benefits, or that the regulation in question is redundant, it will automatically be repealed unless the legislature’s Regulations Review Committee votes to keep it.

• Creating Next Generation Industries in Connecticut:  Senate Republicans are proposing to extend the movie industry tax credit that created “Hollywood East” to emerging industries likely to provide employment to middle class working families in Connecticut.  Targeted industries could include alternative energy, environmental remediation, optics and photonics, life science devices and nanotechnology.  Under the proposal, companies who have not yet made a profit may trade their tax credits to profitable Connecticut companies.