Tax Credit; Training, Jobs

Provides an income tax credit for the cost of training a taxpayer
or a taxpayer's employees to upgrade their technology-related
skills.  (SD1)

HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                S.D. 1
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
20 a new technology-related job to use the tax credit for new

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                                     H.B. NO.           H.D. 1
                                                        S.D. 1

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

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                                     H.B. NO.           H.D. 1
                                                        S.D. 1

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

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                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1      (1)  Of training employees to fill a newly created
 2           technology-related job under subsection (a)(1), but
 3           shall not exceed $          ; or
 4      (2)  Of training incurred by an individual taxpayer under
 5           subsection (a)(2), but shall not exceed $          .
 6 The credit may be claimed only by the taxpayer who paid for the
 7 cost of the technology training and may be claimed against the
 8 taxpayer's income tax liability for the taxable year; provided
 9 that no deduction may be taken for income tax purposes by a
10 taxpayer for the cost of training for which a credit is claimed
11 under this section.
12      (c)  The tax credit claimed by a taxpayer pursuant to this
13 section shall be deductible from the taxpayer's individual income
14 tax liability, if any, for the taxable year in which the credit
15 is properly claimed.  If the tax credit claimed by a taxpayer
16 exceeds the amount of income tax payment due from the taxpayer,
17 the excess of credit over payments due shall be refunded to the
18 taxpayer; provided that a tax credit properly claimed by a
19 taxpayer who has no income tax liability shall be paid to the
20 taxpayer; and provided further that no refunds or payment on
21 account of the tax credit allowed by this section shall be made
22 for amounts less than $1.
23      (d)  All claims for a tax credit under this section,

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                                     H.B. NO.           H.D. 1
                                                        S.D. 1

 1 including any amended claims, must be filed on or before the end
 2 of the twelfth month following the close of the taxable year for
 3 which the credit may be claimed.  Failure to comply with the
 4 foregoing provision shall constitute a waiver of the right to
 5 claim the credit.
 6      (e)  The director may adopt rules and forms necessary to
 7 carry out this section.  The director may require the taxpayer to
 8 furnish reasonable information to ascertain the validity of the
 9 claim for credit under this section
10      (f)  For the purpose of this section "technology-related"
11 means emerging industries that are technology intensive,
12 including but not limited to electronics, biotechnology, or
13 computer systems."
14      SECTION 3.  New statutory material is underscored.
15      SECTION 4.  This Act, upon its approval, shall apply to
16 taxable years beginning after December 31, 1999.