Manufacturers and other small and midsize businesses in Connecticut got a boost this week as the Commerce Committee approved two tax proposals designed to help them.
The committee’s bills extend certain state tax credits to pass-through organizations: SB 303 expands the state’s research and development (R&D) tax credits, and SB 420, allows access to the state’s apprenticeship tax credit.
In Connecticut, businesses increasingly are being structured as S corporations, limited liability corporations, and limited liability partnerships, collectively known as pass-through entities.
But these pass-through entities, which pay their business taxes through the state’s personal income tax, are, so far, ineligible for the business tax credits. Recent increases in the state’s income tax have increased the urgency for these businesses to have access to the tax credits in order to meet some critically important needs.
For example, R&D is crucial to the short- and long-term health of many businesses, as well as a big factor in Connecticut’s innovation economy. Extending the R&D tax credit to pass-through entities will enable the state’s small and midsize businesses to invest more in R&D and increase their competitiveness in Connecticut.
Apprenticeships are important to making sure that manufacturers in the state have a steady supply of skilled talent. With Connecticut’s aging manufacturing workforce population, the current shortage in skilled workers is proving even more problematic.
These types of measures will not only provide tangible help to many Connecticut businesses, but will send a very positive signal to the business community about prospects for competing and succeeding in the state.