They should think again. The federal government offers generous tax credits for companies that choose to set up operations on Indian land.

The Indian Employment Credit and accelerated depreciation of property are two of these incentive programs that benefit both the capital and operational sides of businesses.

Indian reservations are found in the states of Alaska, Alabama, Arizona, California, Colorado, Connecticut, Florida, Iowa, Idaho, Kansas, Louisiana, Maine, Michigan, Minnesota, Missouri, Mississippi, Montana, North Carolina, North Dakota, Nebraska, New Mexico, Nevada, New York, Oklahoma, Oregon, Rhode Island, South Carolina, South Dakota, Texas, Utah, Washington, Wisconsin and Wyoming.

The accelerated depreciation for property on Indian reservations allows business to depreciate capital expenses more rapidly and reduce their tax liability earlier.

The tax credit for Indian employees allows businesses to use a portion of the wages and health insurance benefits paid to directly reduce their tax liability and after-tax income.

The accelerated depreciation incentive applies to buildings, equipment and land located on a reservation that is used to operate a business.

Infrastructure such as roads, power lines, water systems, railroads and communication facilities that benefit a firm operating on a reservation qualify, even if the investment is not on the site. However, the property must be put into service in the business's operations between Jan. 1, 1994, and Dec. 31, 2003.

Accelerated depreciation increases expenses and reduces taxable income in the early years of business.

Reducing taxable income cuts a company's tax bill and increases after-tax profit for these same years.

This is advantageous to firms because it enhances their earnings and worth during the year in which the capital investment decision is made. Revenue is provided more quickly, and businesses are able to increase or replace existing capital.

The Indian Employment Credit is available to businesses that hire an employee who is an enrolled member of an Indian tribe or the spouse of an enrolled member.

The employee must work on the Indian reservation or live on or near a reservation and must earn less than $30,000 a year. Employees who own more than 5 percent of a firm or who work in certain gaming facilities are not eligible to be considered for the credit.

Only $20,000 of wages are eligible to be considered for this credit. And, if an employee earns over $30,000 a year, none of that employee's wages can be considered for the credit. Each company should check carefully to learn how the credit applies to their particular expansion plans.

The em-ployment tax credit is a more lucrative benefit to companies than the accelerated depreciation tax credit, but accelerated depreciation can provide a source of funds to further expand your business.

Since Indian reservations can be found in all regions of the country, be sure to consider these benefits as you're looking for a new site.

Susan Williams is a tax analyst at Mintax, Inc., an East Brunswick, N.J., economic development consulting firm specializing in incentives. You can reach her at info@mintax.com