146th GENERAL ASSEMBLY

FISCAL NOTE

Bill: SENATE BILL NO. 91

sponsor: Senator DeLuca

DESCRIPTION: AN ACT TO AMEND TITLE 5 OF THE DELAWARE CODE RELATING TO THE BANK FRANCHISE TAX.

ASSUMPTIONS:

1. Effective for tax years beginning after December 31, 2011.

2. The Act reduces the location benefit tax paid by banks that elect to pay Bank Franchise Tax under the alternative method of calculation. Further, The Act creates a 10 year tax credit for banking organizations that add 200 or more jobs after 2011.

3. The initial tax is lowered from $2.0 million to $1.6 million and the bracket rates are lowered as follows:

Current Rate Proposed Rate

Assets not in excess of $5,000,000,000 .015% .012%

$5,000,000,000 to $20,000,000,000 .010 .008

$20,000,000,000 to $90,000,000,000 .005 .004

$90,000,000,000 to $100,000,000,000 .005 0.0

4. Qualification for the tax credit requires a minimum of 200 qualified hires and new investments of at least $15,000 per new hire.

5. The revenue loss estimate is comprised of both the tax reduction and the credit qualification. The tax reduction is estimated to be $2.4 million in the first (partial) year, and $6.0 million annualized. The tax credit is estimated to involve $1.0 million in the first year and $2.5 million in the first full year.

REVENUE LOSS:

FY 2012 $3,400,000

FY 2013 $8,500,000

Office of Controller General (Amounts are shown in whole dollars)

June 02, 2011

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