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A group of seven Delaware lawmakers have proposed a $60,000 hike in the state’s maximum corporate franchise tax, offering an alternative plan to what Gov. John Carney (D) proposed in his fiscal year 2018 budget.
The vying proposals offer two ways for Delaware to raise revenue as the state grapples to fill an almost $400 million budget deficit.
H.B. 102, sponsored by Rep. John A. Kowalko (D), would increase the maximum annual corporation franchise tax to $240,000 from $180,000. It was introduced March 28 and assigned to the House’s revenue and finance committee.
The governor’s proposal would add a new tax tier to the system and increase the maximum tax for the first tier to $200,000 from $180,000.
The governor’s plan then creates a new second tier for public companies with greater than $750 million in revenue or assets and no less than $250 million in revenue or assets.
Companies would need to meet thresholds in both categories to fall into the second tier, Doug Denison, director of community relations at the Delaware Department of State, told Bloomberg BNA in a March 31 email.
In other words, to become part of the second tier, a company with $750 million in assets also must have at least $250 million in revenue, while a company with $750 million in revenue also must have at least $250 million in assets.
Companies that fall into the second tier would pay a maximum tax of $250,000.
About 950 companies would fall into the new category, Denison said. Carney estimates his plan for the corporate franchise tax would raise an additional $116.1 million in revenue.
Kowalko’s bill, which isn’t part of the governor’s plan, didn’t offer an estimate on how much additional revenue it would raise. Kowalko didn’t immediately respond to requests for comment.
To contact the reporter on this story: Leslie A. Pappas in Philadelphia at LPappas@bna.com
To contact the editor responsible for this story: Ryan C. Tuck at firstname.lastname@example.org
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