Legislature Passes the "Made in Alabama" Job Incentives Act

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MONTGOMERY – The “Made in Alabama” Job Incentives Act, which authorizes the use of innovative tax incentives to recruit international companies to Alabama, received final passage by the Legislature on Thursday

The House of Representatives took up and passed Senate Bill 477, sponsored by Senator Marc Keahey (D-Grove Hill), which will allow the state to use tax incentives to temporarily offset federal tariffs for qualifying companies that commit to build facilities and create jobs in Alabama. Though the House passed its own version of the bill on Tuesday, the quickest way to ensure final passage of the proposal was to pass its Senate companion. The idea was recommended by the Speaker’s Commission on Job Creation, which was chaired by State Representative Phil Williams (R-Huntsville) and released its final report in May.

The House sponsor of the bill, State Representative Barry Mask (R-Wetumpka), said he was proud to work in a bi-partisan manner to pass legislation that can bring jobs to Alabama.

“There are no party labels when it comes to creating jobs,” said Representative Mask, who chairs the House Economic Development and Tourism Committee. “I’m proud to sponsor this bill with Senator Keahey because I believe it will allow Alabama to do something truly significant in economic development. I also want to recognize and thank Representative Alan Harper (D-Tuscaloosa) for his efforts to pass this bill. In this economy, we have to think outside the box when it comes to recruiting jobs, and this proposal is the perfect example of that.”

House Speaker Mike Hubbard (R-Auburn) formed the Commission on Job Creation in February, tasking the select group of business and community leaders to gather ideas that could help improve the state’s business climate and boost private sector job growth. Offering temporary state income tax incentives to offset build-up phase tariff costs for international companies bringing jobs to Alabama was among the nine policy recommendations outlined in the Commission’s final report.

Speaker Hubbard thanked Representative Mask and Senator Keahey for working together to pass this worthy proposal.

“I commend Representative Mask and Senator Keahey for working in a bi-partisan fashion to pass legislation that can make a real difference when it comes to creating jobs in Alabama,” Speaker Hubbard said. “Using these temporary tax incentives to attract international companies was one of the more innovative ideas recommended by the Commission on Job Creation. Alabama will be the only state in the country to offer this kind of incentive, giving us a real competitive advantage that could bring thousands of jobs to Alabama.”

Senator Keahey said the Legislature’s commitment to working across party lines to pass this bill proves that job creation isn’t a partisan issue.

“Attracting new businesses that will create jobs and spark economic growth is our first priority,” Senator Keahey said. “This bill sends a message to companies around the world that Alabama is open for business.”

Senate President Pro Tem Del Marsh (R-Anniston) said Senator Keahey and Representative Mask showed great leadership in working together to pass this job creation bill.

“Our main focus is to create jobs and jumpstart Alabama’s economy,” Senator Marsh said. “One way to do that is to remove red tape that restricts job growth so we can attract new businesses to Alabama.”

Background information on the “Made in Alabama” Job Incentives Act:

The Tariff Act of 1930 allows the federal government to impose countervailing duties and anti-dumping duties on imported products, which increases the cost of those imported products to American customers.   As a result of the duties, foreign companies with American customers must now consider manufacturing their products in the United States so they will no longer be subject to the duties.

Naturally, some companies are looking to establish operations in the United States to manufacture and sell products made by American workers to offset the tariff. However, during the construction and start-up phase, a company has the continued increased cost of paying import duties because the products continue to be manufactured overseas, which puts their customer relationships at risk.  Ultimately, a company risks building a new manufacturing facility only to have lost its customers due to the higher costs from the duties passed on to the customer.  This risk creates hesitancy for some companies to decide to locate in the United States.

Due to changes in global business conditions, there is a significant uptick in companies interested in foreign direct investment in the United States, which has created tremendous opportunities for Alabama.  Accordingly, if Alabama had the ability to mitigate the risk for the company that is subject to the tariff during the period of its project build out and start up, the state would have a competitive advantage over other states in recruiting these companies.

The “Made in Alabama” Job Incentives Act authorizes the Governor and the Alabama Development Office to offer qualifying companies a transferable income tax credit to offset tariff costs as an incentive to create jobs in Alabama.

The credit would:

  • be transferable to ensure true value since other existing laws already provide income tax credits for the company;
  • have substantial minimum criteria for capital investment, the number of jobs created, and average wage paid, among other considerations;
  • be capped to provide certainty to the state’s maximum commitment and contain a sunset provision; and
  • be revocable should the company not meet its threshold requirements or have its federal duties recouped.

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For more information, contact Speaker’s Office Communications Director Todd Stacy at 334-353-0929 or Pro Tem’s Office Communications Director Derek Trotter at 334-201-5035.

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