A Tennessee law enacted last month that specifically cuts taxes for publicly traded investment firms will benefit AllianceBernstein Holding LP in its move to Nashville from New York City.

It’s unclear whether the firm sought the tax break. No Tennessee companies qualified when the state legislature considered it in February. Governor Bill Haslam signed the proposal into law April 9 and AllianceBernstein, which manages $550 billion, announced May 2 it was moving its headquarters, including 1,050 legal, marketing and IT workers, to the home of country music, starting this year. The firm said it considered 30 cities.

Other New York-based financial firms have expanded operations in quieter environs with cheaper office rents. Among them are Goldman Sachs Group Inc. in Salt Lake City; Deutsche Bank AG in Jacksonville, Florida; and Pacific Investment Management Co. in Austin, Texas.

But AllianceBernstein is different. Though the asset manager is keeping portfolio management, sell-side trading and its wealth-management businesses in New York, the firm is also planning to relocate its chief executive officer. Seth Bernstein said he plans to move to Nashville in 2020.

‘Significant Statement’

“Administrative, technology and business-operations jobs have been moving to lower-cost venues for decades in the financial industry,” said Kathryn Wilde, CEO of the Partnership for New York City, a local booster group. “A headquarters move is certainly a significant statement.”

Jonathan Freedman, an AllianceBernstein spokesman, didn’t respond to requests for comment.

AllianceBernstein has been consolidating office space to reduce costs. In an October conference call with investors, the firm said it vacated a floor at its Manhattan headquarters to market it for sublease, a move that was expected to save about $3.6 million a year.

As late as February, an AllianceBernstein securities filing said it was exploring potential locations for “a second principal location.” An account of the site-selection process published on the Williamson County, Tennessee, Chamber of Commerce’s website said that Nashville didn’t appear on AllianceBernstein’s radar until the firm had whittled its list to six finalists.

Tax Credit

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.

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.

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