Tuesday, January 29, 2008

Barr Labs Takes Lead on Corporate Income Tax Bill

From the RTD:

Bill would reduce tax on makers

Tuesday, Jan 29, 2008 - 12:08 AM


Companies with manufacturing in Virginia could see significant reductions in their state corporate income tax under legislation proposed in the General Assembly.

The Virginia Manufacturers Association is backing a bill introduced by Del. Kathy J. Byron, R-Campbell, to change how the income tax on manufacturers is calculated. Under the proposal, manufacturers could opt to pay income tax based only on their sales in Virginia.

The income tax is now calculated using a formula that includes sales, property and payroll, a system that supporters of the legislation said discourages manufacturing investments, contributing to the state's loss of 125,000 manufacturing jobs since 1992.

The proposed change, proponents said yesterday, would give manufacturers an incentive to locate or expand here, and keep Virginia competitive with 17 other states that have adopted similar changes to their tax codes.

"During this time of economic uncertainty, we need to be doing everything -- and I mean everything -- we can to encourage companies to do even more business in Virginia and create more jobs," Byron said yesterday at a news conference with lawmakers from Southside Virginia, a region hit hard by job losses in the textiles and furniture industries. The legislation has been referred to the House finance committee.

Supporters said the impact on state tax receipts would depend on how many manufacturers opted for the sales-only formula. If the legislation had been in effect in 2003, it would have reduced state tax collections by $36 million, the state tax department said.

Executives with Barr Laboratories, a pharmaceutical company with a 600-employee plant in Bedford County, said the current tax structure penalizes the company for investing in the state.

"The more we invest, and the more people we hire, the higher our marginal tax rate, which doesn't make sense to us," said Bruce Downey, the company's chairman and chief executive officer. Barr is expanding its plant and plans to add about 200 employees, but Downey said future expansions are more likely if Byron's legislation passes.

No comments: