Jindal Proposes Cutting $500 Million Of Corporate Welfare

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Peter Fricke Contributor
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Louisiana Gov. Bobby Jindal’s effort to rein in business subsidies could boost his chances for the Republican presidential nomination, but may prove unpopular in his home state.

According to the Christian Science Monitor, “Politicians looking to ‘enhance revenue’ without raising taxes might want to take a close look at Louisiana, where Governor Bobby Jindal may have found the promised land of conservative tax policy.”

Jindal’s plan, which was included in his 2015 budget proposal, would convert a variety of refundable corporate tax credits into non-refundable credits, which he claims would boost state revenues by $526 million. (RELATED: Gov. Bobby Jindal Considering Elimination of Taxes on Oil and Gas Extraction)

Among the tax credits targeted by the measure are those for wind and solar, research and development, natural gas, milk, and even “musical and theatrical” endeavors.

Refundable tax credits are limited only by the conditions attached to the credits themselves, regardless of the recipient’s tax bill, meaning the state must make direct payments to companies whose tax credits exceed their tax liabilities. Making the credits non-refundable would eliminate that subsidy, but would otherwise leave business incentives (and tax rates) untouched.

“Federal and state lawmakers are looking at this form of base broadening as a way address deficits without violating their no-new-taxes pledges,” CS Monitor notes, but “none are quite as bold as Jindal.” (RELATED: Jindal Proposes Elimination of Income and Corporate Taxes in Louisiana)

Jindal’s fight against corporate welfare, even on a somewhat limited basis, should play well with Republican presidential primary voters, but the move could have negative ramifications for his popularity at home.

“A poll released Thursday from LSU’s Public Policy Research Lab says 72 percent of respondents support cutting taxes on business to attract them to the state,” according to The Charlotte Observer, “and 55 percent favor using state tax dollars to pay companies to come to Louisiana.”

Those numbers remained relatively steady, with around 60 percent supporting the tax credits even when respondents were told of specific criticisms about the economic development incentive programs. (RELATED: States May Have to Disclose Business Subsidy Costs)

“If they want to curb these programs, they are going to have to really work to make the case to the public,” the research lab’s director, Michael Henderson, concluded from the results, explaining that, “As of now, most of the public sees these incentives as good for the state.”

On the other hand, the outgoing secretary of the Louisiana Department of Economic Development, Stephen Moret, recommends going even further to reduce business incentives, The Advocate reports. At a recent budget hearing, Moret encouraged state lawmakers to scrutinize film tax credits, as well, claiming the credits now cost more money ($240 million last year) than they generate in economic activity.

“Jindal’s proposed budget doesn’t recommend any changes to the film credits, which have become a poster child for corporate welfare,” the article says, but quotes a spokesperson for Jindal who said the governor is “open to working with legislators on tax credits—any of them—if there’s an appetite for that.”

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