It is the first week of the 2012 Regular Legislative Session in Florida, and a very important week for Florida defense contractors, which brought $28 billion in defense contracts to the state over the last two years.
With uncertainty from the federal budget situation clouding the future of the industry, its businesses, and the 21st century jobs it provides, it is imperative the state do what it can to blunt the cuts that are coming our way. The state can help these businesses by reducing their tax burden allowing them to be more competitive for federal contracts than those in other states. A reduced tax burden also encourages defense businesses to invest in new operations in the state, even relocating here. Florida would be much worse off economically if it were not for the military and defense presence in our state, and the state can prevent a significant dropoff over the next decade by acting now.
Our proposals target the corporate income tax. Reducing it for defense firms allows them maximum flexibility to reinvest in the state and create jobs. Benefits that can be realized immediately, rather than waiting on typical economic development programs which take years to assist a business and come with many strings attached – strings, which put such programs out of reach for small and medium size businesses and which do not fit the business model of defense firms that must compete for contracts from the federal government in order to maintain at least a steady flow of revenue.
If Florida does nothing, high-tech businesses will close, high-wage jobs will be lost. This week begins the journey to help defense businesses survive and thrive, and set Florida up for future economic growth.
Here are our proposals as they stand at the start of Session:
Corporate income tax exemption based on a percentage of a business’ annual defense revenue (except for that revenue that is in turn paid out for subcontract work).
• 100% exemption on first $500K in defense revenue
• 50% exemption for between 500K and $1M in defense revenue
• 25% exemption for between $1M and $5M in defense revenue
Corporate income tax exemption based on current or newly created defense related work hours in Florida.
• $0.20 per defense work hour current work ($408 for 2040 hrs)
• $0.40 per defense work hour new work ($816 for 2040 hrs)
• Each capped at 204,000 defense work hours (equivalent to 100 employees)
Corporate income tax exemption for using Florida based suppliers, vendors, and subcontractors.
• $2000 for every $1 million subcontracted within Florida (capped at $500,000 per company)
Defense professionals don’t forget, you can help us move these issues forward by attending our Florida Defense Contractor Day in February.