Prohibits issuance of Research and Development tax credits for certain periods of time
Impact
The prohibition against issuing R&D tax credits is expected to have significant implications for businesses engaging in research within Louisiana. By temporarily halting these credits, the state may deter some investment in innovation activities, potentially affecting competitive advantages for firms operating in sectors reliant on technological development. Additionally, the lack of such incentives might impact job creation in R&D-intensive fields, as companies may reconsider their expansion or investment strategies without the financial support that tax credits provide.
Summary
House Bill 740, introduced by Representative Thibaut, specifically addresses the issuance of research and development (R&D) tax credits in Louisiana. The bill notably prohibits the issuance of these tax credits for a designated period from July 1, 2015, to June 30, 2017. This decision aims to temporarily halt any new credits associated with R&D activities, thus impacting businesses that might otherwise benefit from these tax incentives. The bill is tied to the broader context of corporate taxation and budget considerations within the state, reflecting a legislative attempt to manage fiscal policy in light of economic circumstances.
Sentiment
Sentiment regarding HB 740 appears mixed among stakeholders. Supporters may argue that the move is necessary for short-term fiscal responsibility and aligning the state’s budget. However, opponents have voiced concerns that restricting access to R&D tax credits could stifle innovation and growth within the state’s economy. These contrasting perspectives underscore an essential debate on the balance between immediate fiscal needs and long-term economic development goals.
Contention
A notable point of contention surrounding HB 740 involves the potential economic trade-offs. Proponents of the bill may prioritize the state's immediate budgetary concerns, reflecting a need to curb spending and reallocate resources strategically. In contrast, critics warn that creating a less favorable environment for R&D could lead to a long-term decline in Louisiana's attractiveness as a destination for tech firms and innovators. The bill thus encapsulates a tension between responsible governance and the necessity of fostering an environment conducive to economic growth.
Exempts certain research and development tax credit recipients from detailed examinations by the Department of Economic Development (EN SEE FISC NOTE GF EX See Note)
Establishes a baseline limit on all claims against income and franchise tax for Research and Development tax credits filed during a fiscal year on a first-come, first-served basis and gives claims above the amount priority in the next fiscal year. (gov sig)
Provides relative to the amount of the research and development tax credit and authorizes transferability of the credit under certain circumstances (EN +$300,000 GF RV See Note)
Establishes termination dates for certain tax credits and incentive programs administered by the Department of Economic Development. (gov sig) (EN INCREASE GF RV See Note)