Tax Credit; Training, Jobs

Creates tax credits for new economy skills training for the costs
of training in technology related skills.

HOUSE OF REPRESENTATIVES                H.B. NO.           
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT



 1      SECTION 1.  The legislature finds that the information
 2 technology sector of the economy is the fastest growing sector of
 3 the U.S. workforce, creating millions of high paying jobs across
 4 the nation.  Computers are an indispensable tool in business, and
 5 technology sector products can greatly enhance business
 6 productivity and level the playing field between big and small
 7 business.  Currently, demand for skilled information technology
 8 workers exceeds the number of persons with the appropriate
 9 technical certification or college degree.  However, costs of
10 information technology training programs are often expensive, and
11 underemployed persons and small businesses alike find it
12 difficult to pay for training that will enable them to compete.
13      The legislature further finds that tax credits are an
14 efficient way for Hawaii to deliver incentives to businesses and
15 individuals to capitalize on the growth of technology related
16 industries.  By requiring the creation or acquisition of a new
17 job, the proposed tax credit isolates the total cost of this
18 program and gives incentives for continuing education in areas
19 where the skills are in demand.  Because an employer must create

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 1 a new technology related job in order to use the tax credit for
 2 new economy skills training expenses, the employer has the
 3 flexibility to determine what kind of training to provide for the
 4 jobs needed by the employer.  In addition, companies will not pay
 5 for training costs if job opportunities do not exist.  Since
 6 individuals receiving training from other than their employer
 7 will have to get jobs paying fifteen per cent more than their
 8 current job in order to receive the credit, the State will begin
 9 recouping its investment in the form of additional personal
10 income taxes paid that would otherwise not be generated.
11      For example, if Company A decides to open an office in
12 Hawaii, but finds that many of the applicants do not have the
13 requisite computer skills needed, Company A may pay to train its
14 own employees, and receive a tax benefit for the amount of the
15 training expenses.  The tax credit would also apply if Company B
16 decides it needs a full time information technology specialist
17 but does not have any current employees with the necessary
18 skills.  If Company B pays the training costs for one of its
19 employees to upgrade the employee's skills, and then promotes the
20 employee into the newly created position, the tax credit applies
21 to those training costs.
22      Individuals would also benefit.  If a currently employed
23 individual takes courses to upgrade the individual's technology

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 1 skills, and as a result gets a new job that pays at least fifteen
 2 per cent more, the individual is eligible for the tax credit for
 3 the cost of the training.
 4      The purpose of this Act is to support the growth and
 5 development of technology in Hawaii by offering a tax incentive
 6 for new economy skills training to offset the cost of training,
 7 retraining, and related job creation costs.
 8      SECTION 2.  Chapter 235, Hawaii Revised Statutes, is amended
 9 by adding a new section to be appropriately designated and to
10 read as follows:
11      "235-    Tax credit for new economy skills training.  (a)
12 Each taxpayer in this State may claim a tax credit for new
13 economy skills training under this section.  The credit shall be
14 for the cost of training the taxpayer or the taxpayer's employees
15 to upgrade the taxpayer or the taxpayer's employee's technology
16 related skills.  To claim the credit:
17      (1)  An employer must create a new technology related job to
18           be filled by the employee receiving the technology
19           training; or
20      (2)  An individual taxpayer must acquire, within one year of
21           completion of the technology training, a technology

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 1           related job that pays fifteen per cent more than the
 2           taxpayer's previous job.
 3 The credit shall be equal to the cost of this training or
 4 creating those jobs but shall not exceed $           for
 5 individual taxpayers and shall not exceed $           for
 6 employees.  The credit may be claimed only by the taxpayer who
 7 paid for the cost of the technology training and may be claimed
 8 against the taxpayer's income tax liability for the taxable year.
 9      (b)  The tax credit claimed by a taxpayer pursuant to this
10 section shall be deductible from the taxpayer's individual income
11 tax liability, if any, for the tax year in which the credit is
12 properly claimed.  If the tax credit claimed by a taxpayer
13 exceeds the amount of income tax payment due from the taxpayer,
14 the excess of credit over payments due shall be refunded to the
15 taxpayer; provided that a tax credit properly claimed by a
16 taxpayer who has no income tax liability shall be paid to the
17 taxpayer; and provided further that no refunds or payment on
18 account of the tax credit allowed by this section shall be made
19 for amounts less than $1.
20      (c)  All claims for a tax credit under this section,
21 including any amended claims, must be filed on or before the end
22 of the twelfth month following the close of the taxable year for
23 which the credit may be claimed.  Failure to comply with the

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 1 foregoing provision shall constitute a waiver of the right to
 2 claim the credit.
 3      (d)  For the purpose of this section "technology" means
 4 emerging industries that are technology intensive, including but
 5 not limited to electronics, biotechnology, or computer systems."
 6      SECTION 3.  New statutory material is underscored.
 7      SECTION 4.  This Act shall take effect upon its approval;
 8 provided that section 2 shall apply to taxable years beginning
 9 after December 31, 1999.
11                           INTRODUCED BY:  _______________________