Delaware Gov Proposes Tax Cuts To Spur Economy

RANDALL CHASE

DOVER, Del. (AP) ⿿ Gov. Jack Markell on Thursday proposed a modest reduction in personal income taxes for Delawareans and a variety of tax breaks for businesses in an effort to spur economic development.

The proposal, with an initial cost of about $54.5 million, is part of Markell's plan to invest some $320 million that has been added to the state's official revenue estimate since Markell proposed his fiscal 2012 budget in January. On Wednesday, he proposed $135 million in spending to help create jobs, including $40 million to create a new infrastructure fund aimed at business relocation and expansion, and $40 million to shore up the state's transportation trust fund.

Markell's tax recommendations include cutting the top marginal personal income tax rate from 6.95 percent to 6.75 percent. The reduction would take effect in January if approved by lawmakers and would cost $6.8 million in the first year and $17 million in 2013, according to state finance secretary Tom Cook.

The governor said he wasn't willing to lower the top rate to the 5.95 percent level where it was two years ago before he and lawmakers agreed to increase it in order to address a budget shortfall.

"I am concerned about the state of the economy," he said Thursday. "... We're not immune from what's going on in the national economy, ... and it's not yet clear that the national economy is running on all cylinders."

In an effort boost Delaware's financial services industry, Markell is proposing an $8.5 million tax break for banks by using a new alternative method for calculating bank franchise taxes. The tax break would be coupled with an enhanced tax credit of up to $12,500 over 10 years for each new employee hired by banks if certain requirements are met. Those requirements include adding at least 200 new jobs and making capital investments of at least $15,000 for each new employee.

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