Legislature(2011 - 2012)

2011-01-24 House Journal

Full Journal pdf

2011-01-24                     House Journal                      Page 0102
HB 118                                                                                                                        
HOUSE BILL NO. 118 by the House Rules Committee by request of                                                                   
the Governor, entitled:                                                                                                         
    "An Act relating to a tax credit for corporate income taxes paid for                                                        
    qualified research and development expenditures; and providing                                                              
    for an effective date."                                                                                                     
was read the first time and referred to the Labor & Commerce and                                                                
Finance Committees.                                                                                                             
The following fiscal note(s) apply:                                                                                             
1.  Indeterminate, Dept. of Revenue                                                                                             
The Governor's transmittal letter dated January 21, 2011, follows:                                                              

2011-01-24                     House Journal                      Page 0103
"Dear Speaker Chenault:                                                                                                         
Under the authority of Article III, Section 18, of the Alaska                                                                   
Constitution, I am transmitting a bill establishing a tax credit against                                                        
Alaska income taxes for qualified research and development                                                                      
conducted by corporate taxpayers.                                                                                               
Innovation can be an expensive, intricate, and time-intensive                                                                   
enterprise. However, it also can spark a chain of investments in capital                                                        
equipment, workers, and spillover activities into multiple economic                                                             
sectors. In effect, the research and development tax credit would                                                               
stimulate private-sector investment, entrepreneurial activity, and                                                              
business expansion in Alaska that will bring opportunity and                                                                    
sustainable long-term benefits to our economy.                                                                                  
The credit would be 20 percent of qualified research and development                                                            
expenditures that exceed the average qualified research and                                                                     
development expenditures as defined in 26 U.S.C 41(d) (Internal                                                                 
Revenue Code) for the three years immediately preceding the year in                                                             
which the credit is claimed. Unused credits may be carried forward for                                                          
up to seven years after the expenditure for which the credit is claimed.                                                        
The bill also would impose a reporting requirement so that the                                                                  
Legislature and the public are aware of the fiscal impact and economic                                                          
benefits of the research and development credit to the state.                                                                   
The credit would induce corporations to conduct independent research                                                            
in Alaska. For this reason and others, the credit is supported by the                                                           
Department of Commerce, Community, and Economic Development                                                                     
Advisory Council, which has been directed to identify means to induce                                                           
investment and help increase the viability of business. Other                                                                   
supporters of the tax credit include Alaska businesses and chambers of                                                          
commerce, as well as municipalities and economic development                                                                    
councils. This initiative also parallels efforts by the Anchorage                                                               
Economic Development Corporation to establish relationships with                                                                
corporations looking to relocate to favorable locations in Alaska.                                                              
I urge your prompt and favorable action on this matter.                                                                         
Sean Parnell