Tennessee’s new law implements a method for calculating business taxes known as single sales factor apportionment. Other states have put in place similar laws, which lower costs for taxpayers whose physical presence in a state is greater than its customer base, said Tom Coley, a tax partner at Grant Thornton LLP. Tennessee extended a similar system to manufacturers in a separate tax rule passed last year.
The Tennessee law applies to “financial asset management” companies that are either subject to public-company reporting requirements or are at least partially owned by a publicly traded partnership, according to a brief published by PricewaterhouseCoopers LLP. Recent changes to North Carolina’s tax law meant that Charlotte -- another city the firm is said to have considered -- could have offered similar benefits.
The move could add about 2 percentage points to AllianceBernstein’s margins, according to Citigroup Inc. analyst William Katz. Most of the savings would come from real estate and employee compensation.
Job Creation
Scott Harrison, a spokesman for Tennessee’s Department of Economic and Community Development, said that his agency anticipated the asset manager would qualify for grants, but that the firm and the state had yet to finalize an agreement. Tennessee also offers a “Super Job Tax Credit” of $5,000 per job to companies that move their headquarters to the state and meet certain investment thresholds.
Tennessee also has no personal tax on wages and salaries, and is phasing out a tax on investment income. It had the fourth-lowest state-and-local-tax burden in 2012 while New York had the highest, according to a February report by the Tax Foundation.
Until last year, U.S. taxpayers could deduct their state and local taxes, including property levies, from their federal returns, dulling the pain for affluent residents of high-tax states. A federal tax bill signed into law in December by President Donald Trump sharply reduces the deduction, widening the gap between the liabilities wealthy filers face in high- and low-tax states. The average salary of the workers moving to Nashville will be between $150,000 and $200,000, AllianceBernstein Chief Operating Office James Gingrich told the Tennessean.
In a securities filing, AllianceBernstein said it gave $4 million awards to its chief financial officer, general counsel and head of human capital, contingent on the executives staying at the firm’s new location through 2022. The filing said Gingrich will get $14 million if he stays that long.
This article was provided by Bloomberg News.