INCENTIVES

The Polk County Industrial Development Corporation is committed to the promotion of high-quality development in all parts of the county and to ongoing improvements in the quality of life of its citizens. These objectives are generally served by the enhancement, expansion, and diversification of the local economy. Tax abatement, a reinvestment or enterprise zone, and a revolving loan fund are just a few of the advantages offered.

POLK COUNTY STRATEGIC INVESTMENT AREA

Polk County is one of the few counties in the State of Texas where job creation, investment and research activities by businesses can lead to franchise tax credits. The county has been designated as a full-purpose Strategic Investment Area (SIA) for year 2003 by the State Comptroller's Office, meaning businesses can apply for millions in state tax. All three tax credits are real and businesses large and small will benefit.

Companies may qualify for a Job Creation Credit equal to 5 percent of the wages paid to workers holding those jobs. The credit is 5 percent for 5 years beginning with the year the jobs were created. To qualify, a corporation must create at least 10 jobs, pay at least 110 percent of the county's average weekly wage, pay health benefits and be engaged in manufacturing, warehousing, wholesale distribution, computer services or research. The credit is limited to 50 percent of the firm's tax liability in the year that credits are claimed. Unclaimed credits may be carried forward for a maximum of 5 years.

Corporations that invest at least $500,000.00 in machinery and equipment can qualify for a franchise tax credit equal to 7.5 percent of that investment. This credit is limited to 50 percent of the firm's tax liability and any unclaimed credits may be carried forward for a maximum of five years.

The Research Credit is available to firms that perform qualified research in Texas. It is based on the firm's annual increase in research activities during the year compared to a base amount. Five percent of the qualified research expenses will be credited for tax reports due in 2003 and after. The amount of the company's credit may be as large as 50 percent of its franchise tax liability. Unused credits may be carried over for a maximum of 20 years.

Tax Abatement

To promote the retention and expansion of business activity, the Polk County Industrial Development Corporation utilizes a tax abatement policy. According to Texas law, Property Redevelopment and Tax Abatement Act, Chapter 312, the city of Livingston and the county of Polk may grant tax abatement on the increment in value added to a particular property by a specific development proposal which meets the economic goals and objectives of the entities. The tax abatement shall not apply to any portion of the inventory or land value of the project Tax abatement ordinarily will not be considered for projects which would be developed without such incentives unless it can be demonstrated that higher development standards, aesthetic improvements, or other development goals will be achieved through the use of the abatement. Tax abatements are granted to the owners of improvements on real property. Projects which are developed involving leased real property shall be governed under special terms and conditions which may be set forth in the agreement governing each specific tax abatement.
Within the context of these goals, the Polk County Industrial Development Corporation, on a case-by-case basis, give consideration to providing incentives as a stimulus for economic development in Polk County.

City Utility Extension

A request for city utility extension must involve a development project that will add full-time jobs or increase the ad valorem value of the property. The project shall make a substantial contribution to development efforts in the city by enhancing either additional improvements or furthering redevelopment and preservation activities within special planning areas. The project shall comply with all current environmental standards. No construction may begin until the application is approved. Applicants for utility extension participation should provide a written narrative detailing how the project relates to the criteria established above.

LOCAL AND STATE TAXES

Whether taxes are measured on a per-person basis or relative to income, Texas is among the lowest tax states in the nation. The national average is 33 percent higher than Texas in state taxes and statistics show state taxes consume a smaller proportion of Texas' income. Texas is also consistently rated as one of the top three states to be business friendly.

Income Taxes

Texas has no personal income tax. While Texas does not have a corporate tax, the corporate franchise tax has a component based on earned surplus. Earned Surplus is essentially federal net taxable income, plus compensation paid to corporate officers and directors if the corporation has more than 35 shareholders.

Sales and Use Tax

The state levies a sales and use tax of 6.25 percent on sales of tangible personal property and certain services. Cities, counties, and transit authorities may add to the sales tax rate up to a maximum combined state and local rate of 8.25 percent. Food and drugs are exempt.
The city of Livingston levies a 1.5% sales and use tax and Polk County levies a .5% sales and use tax for a maximum of 8.25% in Livingston or 6.75% in the county.

Ad Valorem (Property) Tax

Texas has no state property tax. Local governments and special taxing districts levy taxes on real and tangible personal property. All property is appraised at full market value and taxes are assessed by local county assessors on 100 percent of appraised value. The total tax rate is the sum of the rates of all applicable taxing units, including cities, counties, schools and special districts. Local governments can enter into agreements with businesses to abate local ad valorem taxes on real and personal property for up to 10 years.