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Lawmaker proposes $2,000 tax credit for hiring vets

Rep. Sonny Borrelli, R-Lake Havasu City

Rep. Sonny Borrelli, R-Lake Havasu City

A Lake Havasu City lawmaker wants to add some teeth to the concept that it pays to hire a vet.

The legislation by Republican Rep. Sonny Borrelli would give businesses a one-time state income tax credit of up to $2,000 for every unemployed vet they hire. The credit in HB 2147 would be double if the vet meets the legal definition of disabled.

“This gives an incentive to take a guy off unemployment,” he said.

Fewer people collecting jobless benefits means less money coming out of the fund which is financed by a tax on all employers . That fund actually went broke during the recession, forcing the state to borrow money from — and pay interest to — the federal government to replenish it.

For the employer, a tax credit is a dollar-for-dollar reduction in what a company owes the state.

“The employer can just knock that off of his overhead as a business expense,” Borrelli said.

Borrelli, who served 20 years in the Marines, said he has no idea how many unemployed vets there are in Arizona.

“But with the downsizing of the military and the drawdown of these conflicts overseas, we’re going to get 200,000 vets discharged in one year,” he said. And Borrelli said even if someone enlisted from Arizona there’s no way to know whether they would return here.

He guessed that 10,000 of the vets would end up in Arizona.

That, then, could mean $20 million in tax credits — money the state does not receive. And that might put it in conflict with other proposals that will reduce state revenues, like the plan by Gov. Jan Brewer to exempt manufacturers from having to pay sales taxes on the electricity they purchase.

Gubernatorial press aide Andrew Wilder estimates the proposal, which his boss is pushing as an economic development tool, would cost the state between $17 million and $20 million a year.

But Borrelli said it would be wrong for his legislation to have to compete.

“Each bill needs to be considered on its own merit individually, not lump them together,” he said. “That would be a disservice to each one of these bills.”

The measure is not an open checkbook for employers.

Aside from the credit applying only to those who have been collecting unemployment benefits, the worker would have to be paid at least the median wage for the state. For 2012 that was $16.34 an hour.

And the credit could not be more than 10 percent of the worker’s wages for that year.

Borrelli said that, ideally, he would like to give a tax credit to anyone who hires someone who is collecting jobless benefits.

“It’s like my grandmother says: You can’t make a masterpiece statute with one swing of the hammer,” he said. “You have to chip away at it.”

This isn’t Borrelli’s first foray into pushing changes in law to benefit veterans.

He got colleagues to adopt a measure last session which allows a veteran’s military experience to substitute for certain training, like the requirements for getting a commercial driver’s licenses. He cited his own experience in the Marines, driving a tractor-trailer, experience that is not recognized to offset the hours of training required under state law.

This year he wants to expand that to medics who want to be emergency medical technicians and paramedics.

“They have a lot more experience with trauma than anybody would coming out of the schoolhouse,” Borrelli said.

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