Jindal Won’t Rule Out Cuts To Film Credit Program
Louisiana Gov. Bobby Jindal is supporting corporate welfare cuts to help close a $1.6 billion budget hole, which could cost the popular Duck Dynasty TV show millions in tax credits.
Under a $200 million program that provides tax incentives to television and movie producers for filming in the state, Duck Dynasty is claiming $11 million in credits for its first four seasons, Bloomberg reports. Of that, the show’s producers want $4.6 million for the fourth season alone, which comes to roughly $415,000 per episode.
Film tax credits were absent from Jindal’s 2015 budget proposal, in which he proposed converting a variety of refundable corporate tax credits into non-refundable credits. Jindal claims his plan would boost state revenues by $526 million, eliminating roughly one-third of the projected deficit. (RELATED: Jindal to Attempt Massive Tax Credit Overhaul in Final Months)
After balking initially, lawmakers eventually got on board with the idea of trimming corporate welfare, proposing a slate of bills that would trim more than $1 billion from the state budget, potentially forestalling the need for cuts to essential services. Among the proposals is a bill that would reduce spending on film credits from $200 million to $60 million per year.
Jindal’s silence on the matter does not mean he opposes the effort, however. According to spokespersons, the governor is willing to support cuts to the film credit program as long as they are offset by tax reductions elsewhere.
“We have made clear that we are open to different ideas as long as they are part of an overall package that doesn’t raise taxes,” Deputy Communications Director Shannon Dirmann told The Daily Caller News Foundation. (RELATED: Jindal Proposes Elimination of Income and Corporate Taxes in Louisiana)
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, according to Louisiana Economic Development. There is no cap on the rebate, and the state offers an additional 5 percent payroll tax credit for productions that use in-state labor.
The credits are also transferrable, meaning they can be sold to other companies in the event that the credits are worth more than the recipient owes in Louisiana taxes. Alternatively, recipients can sell them back to the state for 85 percent of face value.
Tim Barfield, secretary of the Department of Revenue, told TheDCNF that unlike the reforms proposed in Jindal’s budget, the film credits are non-refundable. As a result, they can reduce a recipient’s tax burden, but cannot create a negative tax liability requiring the state to write a rebate check, so cutting or eliminating them would amount to a tax increase.
“We’ve been in discussion with a number of stakeholders about potential changes that could be made,” he noted, such as reducing the amount of credits available or putting caps on the credits that a single producer can claim.
“At the end of the day, you’ll probably see something done on the film credits, but really it depends on the legislative appetite for offsetting tax cuts,” Barfield said. (RELATED: $1 Billion in Corporate Welfare on Chopping Block in Louisiana)
Supporters claim the film credit program has created over 33,000 jobs since its creation in 2002, about two-thirds of them in the tourism industry.
“It may sound weird that ‘Duck Dynasty’ can produce tourism, but that’s the kind of thing that sells,” Will French, president of the Louisiana Film Entertainment Association, told Bloomberg.
Critics, however, say the structure of the program promotes wasteful spending and invites fraud.
“You can stay in the best hotels in the state, fly in all sorts of people and pay them as much as you want and you are getting at least 85 percent of that back,” Jeffrey Sadow, a Republican blogger and professor at Louisiana State University-Shreveport, told Bloomberg.
Despite the generosity of the credits, several producers have been convicted in recent years of falsifying their expenses in order to qualify for more credits. One case even led to the imprisonment of a former director of the film credit program for bribery, along with a film executive and a lawyer who had paid him off.
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