Legislation promotes economic investment in Tennessee
Posted on May 18, 2005
WASHINGTON, D.C. – U.S. Senators Bill Frist, M.D. (R-TN) and Lamar Alexander (R-TN) today cosponsored the “Economic Development Act of 2005.” This legislation would affirm the right of states to offer economic development tax incentives that encourage businesses to expand or relocate to their state. The legislation is in response to a 2004 ruling by the Sixth Circuit Court of Appeals which held that Ohio’s investment tax credit was unconstitutional. “This legislation reflects America’s commitment to economic policies that encourage development and growth,” said Frist. “By protecting Tennessee’s fundamental right to set its own fiscal policies, this initiative will allow the state to continue pursuing economic investment. This investment supports job growth for hard-working Tennesseans and their families. I look forward to working with my colleagues to passing this commonsense legislation which will ensure Tennesseans are given a fair shake in the marketplace.” “The Economic Development Act of 2005 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. Senator Frist and I will continue to work to protect opportunities for Tennessee's economic growth.” "The Economic Development Act of 2005 is very important to the state of Tennessee and our job creation and retention efforts at the state and local level,” Tennessee Governor Phil Bredesen said. “We are happy to join other states in expressing our strong support for this common sense legislation to provide legal certainty on the constitutionality of state tax incentives for economic development purposes. We would like to thank Majority Leader Bill Frist, Senator Lamar Alexander and Senator George Voinovich for their leadership on this important issue." The “Economic Development Act of 2005” was introduced by Senator George Voinovich (R-OH). The purpose of the legislation is to affirm 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. Large state employers such as FedEx and Nissan utilize these tax incentives, and this important legislation will allow the state to continue offering them. 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. Kentucky, Michigan, Ohio and Tennessee are all under the jurisdiction of the Sixth Circuit.