For Immediate Release
April 27, 2009

 

BUSINESS EXECUTIVES IN CONNECTICUT’S HIGH-TECH COMPANIES SAY CUTTING CORPORATE TAX CREDITS WILL COST JOBS

Business leaders urging state legislators to reject the Finance Committee’s tax plan

The Connecticut Business & Industry Association (CBIA), Connecticut United for Research Excellence (CURE), and executives from the state’s biopharmaceutical, fuel-cell, high-tech manufacturing and other technology-driven companies warn legislators that cutting corporate tax credits will cost jobs.

At a news conference in Hartford today (the second of two to oppose the tax plan), business executives said cuts to corporate tax credits, including the research and development (R&D) tax credit, would make our state’s high-tech companies less competitive, cost jobs, and severely impact Connecticut’s economic recovery.

“Tax credits are designed to encourage economic activity and incent business investment, and they have done just that, creating millions of dollars in tax revenue for the state each year,” said John R. Rathgeber, CBIA president and CEO. “Now is not the time to make cuts in Connecticut’s key growth industries. Cutting tax credits for short-term revenue gains is short-sighted and will ultimately hurt Connecticut’s economy, its residents and its businesses.”

The tax proposal will take a nearly 30% cut out of the research and development tax credit, the electronic and data processing tax credit, the fixed capital tax credit, and all other tax credits.

“Tax credits, especially research and development credits, encourage industries to invest in Connecticut,” said Paul Pescatello, president and CEO of CURE. “These incentives work.  Cutting tax credits for some of Connecticut’s most valuable industries will cut down on activity in the areas policymakers had intended to bolster.  It will hurt the very companies that invest in the products, building, equipment and people of our state.”

Pitney Bowes, a mailstream company with more than 35,000 employees worldwide and more than 3,000 in Connecticut, is part of an industry responsible for 120,000 jobs in Connecticut.  Pitney Bowes conducts a significant portion of its research and development activities right here in the state.

“Decisions about where to invent and how to invent are no longer left to chance,” said Carole Bilson, vice president, engineering and design group, Pitney Bowes Inc. “Because the cost of doing business and the cost of living for employees in Connecticut is high, R&D tax incentives help technology companies of all sizes remain in the state and invent here. We believe the combination of Connecticut’s world-caliber workforce and consistent incentives for investment in technology can mean a bright future for the state.”

The United Technologies Corp. (UTC) is the 37th largest company in the U.S., employing nearly 28,000 people in Connecticut. The company is a leader in aerospace, commercial building and alternative energy industries and operates an extensive research program to identify new technologies.

"Proposals to lower existing tax credit limits will make the credits lessvaluable to UTC and other high-tech Connecticut companies and will influence future business decisions,” said Gary Minor, director, state and local government affairs, UTC. “TheR&D credit is essential to Connecticut's aerospace, bio-tech, and alternative energy industries. Limiting this incentive will make the state less competitive and hurt efforts to attract and retain high-paying jobs necessary for the state’s economic recovery."

Unlike other states, Connecticut currently caps the amount of accrued credits a company may use at 70% of their value. The plan being considered would significantly shrink the cap over two years.

Boehringer Ingelheim is one of the world’s top 20 leading pharmaceutical companies, employing 41,300 employees in 47 countries, and nearly 3,000 in Connecticut. The company spends close to a quarter of its net sales in the research and development of prescription medicines.

“We have and will continue to invest in Connecticut,” says Marybeth McGuire, associate director, corporate communications and state government affairs, Boehringer Ingelheim Pharmaceuticals, Inc. “However, when predictability in the business model is affected by changes in the tax laws, specifically the R&D credit, our growth opportunities in the future could be limited.”

While Connecticut is stripping incentives away from its key industries, other states are taking steps to incent more business and try to lure companies out of the state.

“Because of the high cost of doing business in Connecticut, many states are actively recruiting our businesses, offering tax breaks and other incentives to get them to move out of Connecticut,” said Joseph F. Brennan, senior vice president of public policy at CBIA. “We need to do all we can to prevent businesses from leaving our state and taking good-paying jobs with them.” 

"Technology and innovation continue to change our world, and businesses need a predictable tax structure that encourages activities that will contribute to the successes of our economy,” said Rathgeber.

Businesses from the state’s information technology sector joined CBIA and the Connecticut Technology Council for the first news conference on Thursday, April 23, calling for legislators to reject plans to impose new taxes on the industry.

CBIA is the state’s largest business organization, with 10,000 members.

For more information contact Nancy Andrews, CBIA media relations manager, at 860-244-1957 or andrewsn@cbia.com.

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