Report Title:

Tax Credit for Creating Quality Jobs

Description:

Provides a tax credit for taxpayers that create jobs by hiring additional full-time employees for quality jobs. Defines a quality job as a full-time employee position in enterprise zones with wages that are fifteen per cent above the state average wage. Establishes the amount of the tax credit to be $5,000 over five years. Sets the maximum allowable credit per taxable year to $1,000. Allows carryover of unused credit to subsequent years.

THE SENATE

S.B. NO.

358

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

relating to ECONOMIC DEVELOPMENT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the State continues to face tough economic challenges, foremost of which is an insufficient supply of quality jobs in areas that are in dire need of economic stimulus. Currently, the State has already allowed for the designation of areas with low median family incomes or high unemployment rates as enterprise zones. Chapter 209E, Hawaii Revised Statutes, provides tax incentives for businesses started and maintained in these enterprise zones.

Higher paying jobs bring to a community valuable and specialized skills which can further encourage innovation, skill-sharing, entrepreneurship, and economic development in the area. The legislature finds that Hawaii's families who are located within enterprise zones would further benefit from an influx of quality high paying jobs.

The purpose of this Act is to provide a tax incentive for businesses to create high paying jobs within enterprise zones.

SECTION 2. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235-    Quality jobs creation tax credit. (a) There shall be allowed to each taxpayer subject to the taxes imposed by this chapter, a quality jobs creation tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.

To qualify for the credit, the taxpayer shall have three or more full-time employees and hire an additional full-time employee for a quality job during the taxable year.

(b) The amount of the credit shall be $5,000 for each full-time employee hired during the taxable year; provided that:

(1) The credit shall not be claimed during the taxable year in which the additional full-time employee was hired;

(2) The credit shall not exceed $1,000 in any one taxable year and may be claimed only during the five consecutive taxable years following the taxable year in which the additional employee was hired; and

(3) The taxpayer continues to employ the number of full-time employees the taxpayer had upon hiring the additional full-time employee.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit may be used as a credit against the taxpayer's income tax liability in subsequent taxable years until exhausted.

(d) Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit.

(e) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section. The director may also require the taxpayer to furnish information to ascertain the validity of the claims for credit made under this section and may adopt rules necessary to effectuate the purposes of this section pursuant to chapter 91.

(f) For purposes of this section:

"Full-time employee" shall have the same meaning as provided in section 209E-2.

"Quality job" means a full-time employee position located within an enterprise zone designated pursuant to chapter 209E;

(1) That garners a wage of at least fifteen per cent above the state average wage; and

(2) Requires the full-time employee to spend at least fifty per cent of the work hours within an enterprise zone."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect on July 1, 2003; provided that section 2 of this Act shall apply to full-time employees hired during taxable years beginning after December 31, 2002.

INTRODUCED BY:

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