WINSTON COUNTY - The State Senate on Wednesday evening approved the Alabama Incentives Modernization (AIM) Act, sponsored by Senate Majority Leader Greg Reed (R-Jasper) and Representative Bill Poole (R-Tuscaloosa). The AIM Act is a set of incentives designed to both spur job growth in counties that are experiencing sluggish economic conditions, and to help bring new technology companies to the Yellowhammer State. The Senate approved the bill by a 27-0 vote.
“Alabama’s overall economy right now is very strong, but in some ways the most explosive job growth has been geographically-concentrated in a dozen or so counties. This measure is meant to help jump-start the entire state,” Reed said.
To encourage economic growth in Alabama’s outer-lying areas, the AIM Act expands the number of rural counties that can qualify for incentives under the Alabama Jobs Act that was passed in 2015. Previously, counties had to have 25,000 or fewer people to qualify as rural; under the bill passed Wednesday, counties with 50,000 or fewer people now qualify for the jobs incentives.
According to research done by Auburn University’s Government & Economic Development Institute, counties in Alabama with populations of 50,000 or fewer people had a poverty rate of 23.7% from 2012-2016, while larger counties’ poverty rate was only 15.6%. Similarly, counties with 50,000 or fewer people had a much lower median household income over the same years: $33,865, versus the median household income rate of $44,547 for larger counties.
“I supported this legislation because it allows rural communities to take advantage of opportunity zone programs and tax incentives to give rural communities a chance to lure businesses to our areas. This bill can have tremendous impact on rural counties throughout the state,” said Senate Minority Leader Bobby Singleton (D-Greensboro). “I especially am excited about the Alabama Jobs Act component which will focus on bringing high-tech jobs to our communities so we can rebuild and grow.”
Under the AIM Act, incentives in the form of investment and tax credits will be awarded to companies that bring at least 10 new jobs to a county – whether it’s rural or urban – that has had sluggish job growth and a declining population.
The measure also creates specific incentives for technology companies, which would only need to create a minimum of 5 jobs to qualify for the investment and tax credits.
In order to attract technology companies to Alabama, the AIM Act eliminates the tax on capital gains for investors and employees of technology companies that move to Alabama, with the caveat that the companies must re-locate to the state at least three years beforebeing sold, and stay in Alabama five years after the company is sold.
The same restriction applies for the company’s employees to realize zero capital gains tax. For investors, the break on capital gains tax only occurs if the investors reinvest the funds in other Alabama companies for the following five years.
“Right now, three states – California, New York, and Massachusetts – dominate the technology startup scene. Alabama is a long way from competing at that level, but I am confident that we can compete with the second tier of states – Texas, Maryland, and Colorado,” Reed said.
“The success of Shipt and the energy around startup incubators like the Innovation Depot in Birmingham signal that we have a talented and motivated workforce that entrepreneurs can tap into. More startup technology companies in Alabama will benefit nearly every business industry in the state,” Reed concluded.
See complete story in the Northwest Alabamian.