A proposed set of tax breaks for businesses has caused a rift between the Louisiana Legislature's chief economist and Gov. Bobby Jindal's administration. The differences stem from the potential effectiveness and the costs associated with the proposed tax breaks.
The primary concern is whether the tax breaks will generate enough new income via economic growth to recoup the costs of the money lost by reducing tax revenue. Defenders of the tax breaks argue that they will incentivize people interested in starting a business or companies to move their operations to the state, which would generate new income for the state.
Greg Albrecht, the legislature's chief economist, opposes the tax breaks, arguing that the job and revenue creation from these cuts is not guaranteed and may not be necessary to attract new businesses to the region. If the tax cuts do not generate new jobs, the tax breaks will cost the state money in lost revenue.
Other concerns voiced include a lack of specificity in how and to whom the tax breaks would be implemented, as well as the degree of authority that Economic Development Secretary Stephen Moret would have in allocating the tax savings to specific companies.
With new tax proposals being discussed, those starting new businesses or considering moving their businesses to the state ought to be aware of the details and the possible repercussions of their implementation. For anyone considering moving to or forming a business in the Baton Rouge area, discussing current laws and the potential consequences of changes in the tax structure with an experienced business attorney can help businesses plan accordingly.
Source: The Advertiser, "Jindal tax breaks advance despite concerns," March 27, 2012