Texas Comptroller Carole Keeton Rylander today released a list of counties where businesses can apply for hundreds of millions of dollars in state tax breaks authorized by the Legislature last session.
"These incentives will ignite growth across the state, including in El Paso," Rylander said. "This is exactly what we need to maintain Texas' position as a national leader in technology job growth."
Rylander praised the sponsors -- Senators Rodney Ellis, D-Houston, David Sibley, R-Waco, Royce West, D-Dallas, and Representatives Brian McCall, R-Plano, and Rene Oliveira, D-Brownsville. She also hailed the work of Senators Eddie Lucio, D-Brownsville, Eliot Shapleigh, D-El Paso and Representative Yvonne Davis, D-Dallas.
"Without the exceptional efforts of these individuals, this monumental tax break program would never have seen the light of day," she said.
The new franchise tax credits include a research credit, a job creation credit, and an investment credit and will become available to most taxpayers beginning in 2001. The credits are available for tax reports due on or after January 1, 2000 and are for research conducted, jobs created, or investments made on or after that date.
"All three tax credits are real and businesses large and small will benefit," Rylander said. "The total dollar amount of the tax breaks will depend on how many businesses take advantage of this tremendous tax credit program."
"My vision for the 21st century is paychecks and jobs for Texans, limited government, and unlimited opportunity, and these credits fit with my vision for Texas," she said.
The research credit is available to firms that perform qualified research in Texas. It is based on the firm's annual increase in research activities over the prior year.
Four percent of qualified research expenses will be credited for tax reports due through the end of 2001, and that credit will increase to 5 percent for tax reports due from 2002 on.
Job Creation Credit
Companies that create jobs in selected counties may qualify for a job credit equal to 25 percent of the wages paid to new hires in their first year of employment.
To qualify, a corporation must create at least 10 jobs, pay at least 110 percent of the county's average weekly wage, pay health benefits and be engaged in manufacturing, warehousing, wholesale distribution, computer services or research laboratories.
The credit is limited to 50 percent of the firm's tax liability in the year that credits are claimed. Unclaimed credits may be carried over for up to five years.
Corporations that invest at least $500,000 in machinery and equipment can qualify for a franchise tax credit equal to 7.5 percent of that investment.
This credit, too, is limited to 50 percent of the firm's tax liability.
Rylander determined that 224 counties fall wholly or partially in the state Strategic Investment Areas. "In my most recent 'Texas Economic Update' it is reported that four of the nation's five poorest metro areas are in Texas all along the Texas/Mexico border, with El Paso MSA ranked number five in the nation," she said.
Of those, 115 counties qualify for full-purpose designation based on their relative unemployment rate and per-capita income. This designation will permit firms engaged in manufacturing, warehousing, wholesale distribution, computer services or research laboratories to apply for job creation, investment credits, and a research credit bonus.
Another group of 105 counties qualify only for the limited purpose designation based on their population. Corporations engaged in agricultural processing in these counties can apply for the job creation and investment credits.
The other four -- Dallas, Harris, Bexar, and McLennan counties -- meet the criteria to qualify for the full-purpose designation based on their selection as a federal urban enterprise community. Businesses in areas of the counties in the federally designated zones are eligible for the credits.
"Businesses should be eager to take advantage of this generous tax credit plan which will create good paying jobs for hard-working Texans," Rylander said.
Counties eligible for the full Strategic Investment Areas designation are:
The 105 counties that qualify for the limited purpose Strategic Investment Areas designation are:
Each September, the Comptroller determines the Strategic Investment Areas.