Saying his state is losing money, an Oklahoma legislator wants to place tighter restrictions on a type of tax credit that Rocketplane Global and other companies have received, the Oklahoma Gazette reports:
Under the stateâ€™s transferable tax credit statute, a company that receives the credit may turn around and sell the credit to receive up-front cash. In most cases, the company sells the credit for a discount. But the purchasing company, usually a bank or insurance company, can use its share of the tax credit as it sees fit, which according to Dank may be selling the credit to another company, or writing off the companyâ€™s tax liability.
â€œTransferable tax credits are wrong to me,â€ Dank said. â€œA company not having anything to do with (the industry the tax credit is aimed at) can get money through the tax credit.â€
One example is Rockeplane Global, which in 2003 was awarded an $18 million tax credit from the state. The company, designed to launch space tourism flights from Oklahoma, sold the credit to a bank and received $15 million in up-front cash for the deal. But the bank then had an $18 million credit to spend at its will…
Several companies that have bought tax credits are using the credits to write off insurance premiums to the state. According to information Dank obtained from the Oklahoma Insurance Department, between 2006 and 2008, more than $100 million of tax credit money has been used against a companyâ€™s state premium tax liability.
Dank said he has no problem handing out tax credits to companies who need the extra funds to hire workers and stimulate the stateâ€™s economy. He just doesnâ€™t want those companies selling its tax credits to other companies who may just write off its tax liabilities.
Earlier this year, Rocketplane Global laid off most of its employees and moved out of state without ever flying a suborbital tourism vehicle. The company needs about $200 million dollar to complete development and testing of its planned business jet sized space plane. The company says it still wants to fly out of Oklahoma but it is also looking at sites in Hawaii and Florida.
The Oklahoma Gazette has the full story on the tax credit controversy.