In his haste to score political points against Republicans, an MSNBC reporter repeated a demonstrably false attack on Louisiana Gov. Bobby Jindal.
In a blog post Tuesday, Washington Monthly’s “Political Animal,” Ed Kilgore, accuses Jindal of taking a hypocritical stance on corporate welfare. His support for that charge, though, rests on a deeply flawed understanding of basic terminology.
At issue is a program that provides tax credits for in-state movie and TV production, which some legislators are hoping to scale back as they work to eliminate a projected $1.6 billion deficit. Jindal has cautioned lawmakers that he considers reducing the credits to be equivalent to a tax increase, and that he will not sign any budget that includes net tax increases.
Jindal’s 2015 budget proposal calls for converting a variety of refundable corporate tax credits into non-refundable credits, which he claims would save over $500 million. According to Jindal, this would not amount to a tax increase because it would merely prevent the state from owing businesses money on their taxes. (RELATED: Jindal to Attempt Massive Tax Credit Overhaul in Final Months)
Louisiana’s Motion Picture Investor Tax Credit provides a 30 percent tax credit for in-state expenditures, provided the project spends a minimum of $300,000. The credits are transferable, meaning recipients can sell them either on the open market, generally for between 80 and 90 cents on the dollar, or back to the state for 85 percent of face value.
“So this is the corporate version of the ‘refundable tax credits’ poor people get via the EITC,” Kilgore concludes triumphantly. Describing film credit cuts as tax increases, he crows, “violates Jindal’s own principle that cutting back on refundable tax credits doesn’t violate his no-tax-increase pledge.” (RELATED: Jindal Proposes Elimination of Income and Corporate Taxes in Louisiana)
Well, not exactly.
As Kilgore ought to know, “refundable” has a very specific meaning in the context of tax policy. According to the IRS, refundable tax credits are defined by their potential to reduce one’s tax liability below zero, meaning recipients are eligible to collect the full value of the credits even if that means the government owes them money on their tax bill.
The statute governing Louisiana’s film credits clearly states that, “If the tax credit allowed pursuant to this Section exceeds the amount of such taxes due for such tax period, then any unused credit may be carried forward as a credit against subsequent tax liability for a period not to exceed ten years.”
In other words, film credits cannot be used to reduce a recipient’s tax liability below zero, and therefore do not meet the definition of refundable. (RELATED: $1 Billion in Corporate Welfare on Chopping Block in Louisiana)
Tim Barfield, Secretary of the Louisiana Department of Revenue, confirmed this for The Daily Caller News Foundation, stating unequivocally that, “the credits are not refundable, even for third parties.”
Shortly after Kilgore’s post was published, MSNBC’s “[Rachel] Maddow Blog” reproduced his claims verbatim in a post arguing that Jindal is protecting subsidies for the popular “Duck Dynasty” television show rather than preventing cuts to public university funding. (The film credits cost Louisiana $200 million per year, which happens to be the same amount that some are proposing to cut from Louisiana State University’s budget.)
Apparently, MSNBC neglected to check Kilgore’s bio — conveniently provided right at the end of his blog post — or else did not find anything notable about his ongoing role as managing editor of the Democratic Strategist, “an explicitly and unapologetically partisan platform for the discussion of Democratic political strategy.”
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