Alexander Cosponsors Legislation to Promote Economic Investment in Tennessee

Posted on March 26, 2007

U.S. Senator Lamar Alexander today announced he has cosponsored legislation that would affirm the right of states to offer economic development tax incentives that encourages 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 which 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,” said Alexander. “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. Senator Alexander was an original cosponsor of the “Economic Development Act of 2005” in the last Congress. On this year’s bill he is joined by Sens. Mitch McConnell (R-KY), Kit Bond (R-MO) and Richard Burr (R-NC). Senator George Voinovich (R-OH) was the bill’s original sponsor.