As part of an effort to encourage job growth, Governor Jack Markell outlines a plan to reduce the gross receipts tax for businesses and lower personal income taxes for state residents.
The cuts follow projections from Delaware’s financial forecasters that show an increase in anticipated state revenue. The increase is a sign of an improved state economy, and Markell says, “We have the opportunity now to make reasonable, responsible and targeted tax cuts real.”
To encourage businesses, especially in the state’s ailing financial services industry, to hire more workers, the Governor is proposing the Financial Services Jobs Incentive program. The first part of the incentive reconfigures the way the bank franchise taxes are computed, which Markell says should help preserve financial services jobs already in the state. Markell also wants to create a 10-year, $1,250 tax credit for every new employee brought in at a financial services company that has hired 200 new employees. “This combination of the new credit coupled with the adjustments of the alternative method for computing the bank franchise puts Delaware in a stronger, more competitive position to keep the financial services jobs that we already have, and to build on them.”
Markell has also proposed lowering the state’s gross receipts tax across the board by three percent. The plan increases the monthly exclusion for gross receipts from $80,000 to $100,000. “That will reduce the tax burden on small businesses and manufacturers, and will help create an environment for them in which to grow,” Markell said. The change will take more than 330 businesses in the state off the gross receipts tax rolls.
Markell also wants to reduce the public utility tax from 5% to 4.25%, to help businesses and residents save money. “This will bring down the overall energy bills of Delaware employers so you can spend more of your energy and more of your money growing.”
The plan also calls for a reduction in the top income tax rate from 6.95% to 6.75%. That top rate was recently increased from 5.95% in order to help balance the state budget two years ago.
The Governor’s proposal would also spend $20 million in reducing the state’s debt.