The state would stop sending checks to private businesses if legislation forwarded Monday by a Senate makes it through the process.
Louisiana taxpayers give some businesses about $256 million a year when those companies add up deductions, rebates, credits, and other benefits to find out that in addition to owing no taxes, the state owes them.
Senate Bill 240 would keep the tax breaks but stop the pay-outs to cover the extra.
“It’s nonsensical,” said state Sen. Jay Luneau, the Alexandria Democrat who sponsored the legislation. Once the company’s tax liability hits zero, that’ll be the end of it and the state will not write a check.
“Why are the tax dollars that my companies pay, that your companies pay, going to refund companies with more deductions?” Luneau said.
The state annually exempts $9 billion that otherwise would be taxed and go into the state treasury.
Republican state Sen. Mike Reese, of Leesville, said he was concerned about why individual tax breaks were granted and whether cutting off companies with them at zero would violate the terms of the exemption, deduction, rebate, credit or whatever led to the lower taxes, which are often traded for business expansions and more jobs.
“I agree these deductions are good for economic development reasons,” Luneau said. “But do we really need that business in Louisiana if they have to rely on that money? … There’s a problem with their business model if they have to rely on a state subsidy.”
Sen. Gary Smith, D-Norco, pointed out that the companies wouldn’t lose money, they just wouldn’t get a check from the state. However, the companies would be allowed to carry the additional credits forward into next year’s income taxes.
Sen. Bret Allain, the Franklin Republican who chairs the Senate Revenue & Fiscal Affairs Committee, said the legislation would at the very least begin the discussion on the how exemptions are used in Louisiana.
Only the Louisiana Chemical Association, which represents the chemical-based manufacturing plants, announced its opposition to the legislation.
SB240 was advanced to the full Senate without opposition.