An innovative proposal to help manufacturers grow in Connecticut (HB 6584) is now in the legislature’s Finance Committee awaiting further action.

The Manufacturing Reinvestment Account bill will allow manufacturers to invest up to $250,000 in a tax-free saving account at their local bank for up to five years.

Each year, money deposited in a manufacturing reinvestment account (MRA) would be deductible from the company’s year’s gross income for that year. Account funds must be used for the purchase of machinery, equipment, facilities, or for workforce training and development.

Funds would be taxed at 3.5% upon withdrawal, and any dollars left after five years would be taxed at the normal level (at 7.5% plus a 10% surcharge).

Access to capital is still a problem for businesses trying to grow. While credit conditions are starting to improve in the state, 63% ofrespondents to a recent CBIA survey said that without access to capital they have been unable to expand their businesses, and 26% said they’ve been unable to finance increased sales.

This proposal is a practical, positive way to make it easier for businesses to invest in Connecticut and help manufacturers stay – and expand their presence – in the state.