InvesTexas

Until the 76th Legislative Session in 1999, Texas was one of only five states that offered neither a capital investment tax credit or a research and development tax credit to attract business to the state.

In 1999 the Legislature created a statewide Research and Development Tax Credit as well as Capital Investment Tax Credits and Jobs Creation Tax Credit which apply in  areas of high unemployment and low family incomes.

As we prepare for the 2001 Texas legislative session, legislators are in a position to expand upon one of the strongest tools they have ever created.  In doing  so, they will help to ensure Texas economic development for decades to come.  They should broaden the investment tax credit and research and development tax credit.  Such an innovative tax policy would promote capital investment in Texas and ensure the state's fiscal fitness for future generations.

A broad investment tax credit and research and development tax credit would: 

• Attract businesses to the state
• Increase the tax base
• Increase capital investments
• Increase research and development expenditures
• Increase jobs across the state and across industries

Making such changes to the tax code for the state's fiscal future requires that legislators recognize the wisdom of enduring short-term revenue decreases in order to  reap long-term economic benefits.  The return on such an investment in the state's economic future will be will worth the price.  Dynamic estimates conducted by Billy Hamilton, former Deputy Comptroller, show that a broad investment tax credit would: 

• Add about 105,000 jobs to the Texas economy after 10 years in effect
• Increase state personal income by $7.1 billion a year after a decade of operation
• Add almost $13 billion annually to the gross state product by 2009
• Yield an additional $10.44 in new private sector investment within ten years for each dollar of tax credit

The state's strong fiscal condition heading into the 1999 session makes this a good time to address state tax policy and make Texas a magnet for future business  development.  Let's make sure Texas makes decisions now that will position us for economic success far into the future.