Table 14

Table 14

Start-Up Tax Burdens on an “Average Manufacturing Firm” for the First Ten Years, and Generally Applicable Incentives

	Alabama		Arkansas		Florida		Georgia		Louisiana						Mississippi		North Carolina		Oklahoma		South Carolina		Tennessee		Texas		Virginia
	Alabama		Arkansas		Florida		Georgia		without EZ		with EZ		Quality Jobs		Mississippi		North Carolina		Oklahoma		South Carolina		Tennessee		Texas		Virginia
Taxes (without incentives)
State/Local taxes	1,025,424		1,375,715		1,961,213		1,669,531		1,781,954		1,781,954		1,781,954		1,712,924		1,364,155		1,525,410		1,595,609		1,417,160		2,332,141		1,134,125
sales	112,288		132,737		304,800		130,200		295,875		295,875		295,875		83,925		75,450		144,150		39,600		34,200		54,450		29,700
property	577,435		700,085		1,223,248		1,072,582		1,245,995		1,245,995		1,245,995		1,111,851		654,446		790,075		1,144,931		778,248		1,795,187		594,489
income	283,284		534,523		433,165		456,499		12,954		12,954		12,954		395,690		577,459		492,601		398,928		432,274		0		509,936
franchise	52,417		8,370		0		10,250		227,130		227,130		227,130		121,458		56,800		98,584		12,150		172,438		482,504		0
Federal tax	2,772,749		2,664,131		2,545,769		2,586,826		2,597,417		2,597,417		2,597,417		2,553,098		2,649,115		2,623,921		2,577,074		2,626,761		2,356,619		2,710,930
Total Tax Burden (without incentives)	3,798,173		4,039,846		4,506,982		4,256,357		4,379,371		4,379,371		4,379,371		4,266,022		4,013,270		4,149,331		4,172,683		4,043,921		4,688,760		3,845,055
Tax Incentives
Income/Franchise tax	-283,284	(a)	-170,000	(a)	-142,007	(a)	-125,000	(a)	0		-250,000	(b)			197,845	(a)	-255,448	(a)	0		-199,464	(a)	-33,200	(a)	-241,252	(a)	0
Income/Franchise tax									0		0						-60,400	(b)			161,000	(b)	-189,691	(b)	-223,825	(b)
Property tax	-338,955	(b)	0		-200,000	(b)	-345,600	(b)	-695,612	(a)	-695,612	(a)	-695,612	(a)	-600,400	(b)	-177,782	(c)	-276,475	(a)	-490,717	(c)	-389,124	(c)	-731,359	(c)	0
Sales tax	0		0		-42,000	(a)	0		0		0		0		-14,490	(c)			0		0		0		0		0
Other	0		-1,360,000	(b)	0		0		0		0		-1,750,000	(d)					-1,400,000	(b)	-980,000	(d)	0		0		0
Total Incentives	-622,239		-1,530,000		-384,007		-470,600		-695,612		-945,612		-2,445,612		-812,735		-493,630		-1,676,475		-1,831,181		-612,015		-1,196,436		0	(a)
State/Local taxes (with incentives)	403,185		-154,285		1,577,206		1,198,931		1,086,342		836,342				900,189		870,525		-151,065		-235,572		805,145		1,135,705		1,134,125
Federal tax adjustment	211,561		520,200		130,562		160,004		236,508		321,508		831,508		276,330		167,834		570,002		622,602		208,085		406,788		0
Total tax burden (with incentives)	3,387,495		3,030,046		4,253,537		3,945,761		3,920,264		3,755,267		2,765,264		3,729,617		3,687,474		3,042,858		2,964,104		3,639,991		3,899,112		3,845,055
Start-up sales tax
Bldg. Materials	91,200		81,225		68,400		79,800		96,900		96,900		96,900		79,800		68,400		91,200		68,400		94,050		94,050		51,300
MM&E	108,675		0		0		0		273,700		273,700		273,700		48,300		2,240		0		0		0		0		0
Other personal property	38,400		34,200		28,800		33,600		40,800		40,800		40,800		33,600		28,800		38,400		28,800		39,600		39,600		17,100
Start-up sales tax before incentives	238,275		115,425		97,200		113,400		411,400		411,400		411,400		161,700		99,440		129,600		97,200		133,650		133,650		68,400
Start-up Incentives	-210,000	(c)	-115,425	(c)	-97,200		0		0		-242,000	(c)	0		-64,050	(c)	0		0		0		0		0		0
Total Start up tax	73,275		0		0		113,400		411,400		169,400		411,400		97,650		99,440		129,600		97,200		133,650		133,650		68,400
Fed Adjustment	-24,914		0		0		-38,556		-139,876		-57,596		-139,876		-33,201		-33,810		-44,064		-33,048		-45,441		-45,441		-23,256
Net Start-up Tax Impact	48,362		0		0		74,844		271,524		111,804		271,524		64,449		65,630		85,536		64,152		88,209		88,209		45,144
Total 10-year tax burden (with incents. and start-up taxes)	3,435,857		3,030,046		4,253,537		4,020,605		4,191,788		3,867,071		3,036,791		3,794,066		3,753,105		3,128,394		3,028,256		3,728,200		3,987,321		3,890,199
Federal taxes	2,959,397		3,184,331		2,676,331		2,708,274		2,694,049		2,861,329		3,289,049		2,796,227		2,783,140		3,149,859		3,166,628		2,789,405		2,717,966		2,687,674
State/Local taxes	476,460		-154,285		1,577,206		1,312,331		1,497,742		1,005,742		-252,258		997,839		969,965		-21,465		-138,372		938,795		1,269,355		1,202,525

Alabama	(a) Capital Investment Tax Credit	5% of initial investment-for 20 years 5% x $5,800,000 (land, plant, personal property) = $290,000 Exemption fully covers 10-year total income tax liability of $283,284
	(b) Property Tax Abatement	Optional abatement of non-school taxes for 10 years $577,435 (total 10-yr.tax) x 58.7% (percentage non-school) = $338,955
	(c ) Sales Tax Abatement	Optional abatement of non-school tax for initial construction and equipment 7% x $1,140,000 (bldg. materials) = $79,800 7% x 480,000 (other personal property) = 33,600 3% x 3,220,000 (MM&E) = 96,000 Abatement = $210,000
Arkansas	(a) EZ Jobs Tax Credit (statewide EZ)	100 x # of jobs x avg. hourly. wage; $3,000 maximum; 9-yr. carry forward 100 x 100 x $17 = $170,000
	(b) Create Rebate	Cash Payments of 3.9% of payroll annually for 10 years. 3.9% x $3.5 million x 10 yrs = $1,360,000
	(c) EZ Sales Tax Refund	Refund state & local sales tax on bldg. materials and other personal property
Florida	(a) Quality Target Industry Tax Program	Refund first four years of income ($142,007) and sales taxes (42,000) as well as the start-up sales taxes ( $97,200)
Florida	(b) Property Tax Abatement (1/3 of counties, 623 cities use)	$2,000/ job against first four years' taxes $2,000 x 100 = $200,000
Georgia	(a) Jobs Tax Credit (assume tier 3)	$1,250/ job over 5 yrs. following year credit earned maximum of 50% of 5-yr income tax liability or $126,610 $1,250 x 100 = $125,000
Georgia	(b) Inventory Tax Credit ( 70% of counties use the option)	All inventory tax (county, city, school) for 10 years $2,400,000 (inventory) x 40% (assessment ratio) x 36 mills x 10 yrs. = $345,600
Louisiana	(a) 10-year Industrial Property Tax Exemption	The 10-year total property tax on the building and MM&E = $695,612
	(b) EZ Jobs Tax Credit	$2,500/ job with a 10-year carry forward $2,500 x 100 = $250,000 (The total income & franchise tax liability after the inventory tax credit is removed equals only $240,084. If the job tax credit is taken before the refundable inventory credit, the full $250,000 jobs credit could be taken.)
	(c) EZ Sales Tax Rebate (on start-up costs)	4% state and 1% local sales tax on building materials , MM&E and other personal property ($4,840,000 x 5%) = $ 242,000
	(d) Quality Jobs	5% of payroll for 10 years $3,500,000 x .05 x 10 = $1,750,000
Mississippi	(a) Jobs Tax Credit	Tier 2 income tax credit, $1,000 per job, annually for 5 years; beginning year 2; 5-year carry forward from year last excess available; limit 50% of tax liability. $1000/100/5 = $500,000 but 50% of tax yrs. 2-10 = $197,845
	(b) Property Tax Abatement	abate all non school (54%) property taxes for 10 years $1,111,851 ( total tax liability) x .54 = $600,400
	(c ) Sales Tax Exemption (begin in year 0 to capture start up costs)	Tier 2 Exemption = 50% of sales tax on building materials and MM&E for 10 years (1) Start up tax incentive = 50% x (79,800 + 48,300) = $64,050 (2) Replacement purchases, years 6-9 = 50% x 28,980 (4 years' MM&E tax) = $14,490
North Carolina	(a) Jobs Tax Credit	Tier 3; $3,000/job credit equal amounts for 4 years following job creation 100 x 3,000 = 300,000; 300,000 / 4 = 75,000/year Total tax liability years 2-5 = $255,448
	(b) Machinery and Equipment Tax Credit	Tier 3; 7% over $200,000; equal credit for 7 years $3,220,000 - 200,000 x .07/7 = $30,200/yr. Jobs Tax Credit covered income tax liability for first 5 years M&E credit for years 6 and 7 = 30,000 x 2= $60,400
	(c ) Local Cash Grant Refunds	Refund 50% of property paid for first 5 years 50% x 355,563 = $177,782
Oklahoma	(a) Property Tax Abatement	5-year abatement of tax on land, building, M&E and furniture & fixtures $420,475 (5-yr property tax) - $144,000 (inventory tax) = $276,475
Oklahoma	(b) OK Quality Jobs Program	Cash rebate; up to 5% of payroll tax annually for 10 years Assume 4% x $3,500,000 ( annual payroll) = $140,000 x 10 = $1,400,000
South Carolina	(a) Jobs Tax Credit	Tier 3; $2,500/job annual credit for 5 years, maximum 50% of annual tax liability, 15 year carry forward, begins year 2 $2,500 x 100 x 5 = $1,250,000; 50% of year 2-10 tax = $199,464
	(b) Economic Zone Investment Tax Credit	Economic zones (23 of 46 counties), up to 5% of new production equipment cost, one-year credit, 10-year carry forward 5%x $3,220,000 = $161,000
	(c ) FILOT (fee in lieu of tax)	Lowers property tax assessment ratio from 10.5% to 6% (42.86% reduction) for 20 years $1,144,931 (tax at 10.5%) x .4286 = $490,717
	(d) Job Development Credit	cash rebate; 2-5% of payroll annually for 15 years; tier 3 = 70% assume 4% x $3.5 million (wages) =140,000 x 70% = 98,000/yr. 10 yrs. X 98,000 = $980,000
Tennessee	(a) Jobs Tax Credit	$2,000/job credit; maximum 1/3 of income & franchise tax annually; 15-year carry forward $2,000 x 100 =$200,000; $604,712 (10-year total tax liability) - $33,200 (see corporate excise tax credit (b)) = 571,512/3 = $190,504 or maximum credit
	(b) Corporate Excise Tax Credit	1% of M&E + computer, maximum 50% of annual tax, 15-year carry forward 1% x (3,220,000 + 100,000) = $33,200
	(c ) PILOT (Property Tax Abatement)	Assume city and county negotiate 50% abatement for 10 years $778,248 (10-year total tax) x .50 = $389,124
Texas	(a) Jobs Creation Tax Credit	25% of wages paid, maximum 50% of annual franchise tax liability; equal amounts for 5 years; 5-year carry forward 25% x $3,500,000 = $875,000; 50% of tax liability with 5-year carry forward = $241,252
	(b) Capital Investment Tax Credit (new effective 2002)	7.5% of MM&E, 1/5th annually for 5 years, 50% of franchise ann., 7.5 % x 3,220,000 = $241,500 usable amt. = $223,825 NOTE: (a) + (b) are for strategic investment areas, combined limit = 100% of franchise tax liability
	(c ) Property Tax Abatement	Assume city and county (11 mills) + non school (16 mills) abated for 10 yrs. $1,795,187 x .4074 (11/16) = $731,359
Virginia		Virginia has very low basic taxes and provides few tax incentives except for very large investments and in EZs