Johnson City Press - Staff Reports
Sen. Lamar Alexander, R-Tenn., has co-sponsored legislation that would affirm the right of states to offer economic development tax incentives that encourage businesses to expand or relocate to their state.
The Economic Development Act of 2007 responds to a 2004 ruling by the U.S. Court of Appeals for the Sixth Circuit that held that Ohio’s investment tax credit was unconstitutional.
“This legislation preserves the right of states to provide tax incentives to attract business to the state,” Alexander said in a release. “It supports tax incentives that have brought companies like Nissan, Saturn and Dell to Tennessee and created thousands of good-paying jobs for our state. I will continue to work to protect opportunities for Tennessee’s economic growth.”
Specifically, the legislation affirms Congress’s intent that states have the authority to offer tax incentives to businesses for the purpose of stimulating economic development. The Sixth Circuit’s decision could have a direct impact on many of Tennessee’s investment tax incentives; without congressional or Supreme Court action, the Sixth Circuit’s ruling in Cuno v. DaimlerChrysler Inc. could encourage similar lawsuits, and thereby put existing and future economic development tax incentives at risk. Tennessee, Kentucky, Michigan and Ohio are all under the jurisdiction of the Sixth Circuit.