The document analyzes Louisiana's Industrial Tax Exemption Program, which provides property tax exemptions to manufacturers. It finds that the program costs local governments $16.7 billion over 10 years in lost tax revenue. Only 31,150 permanent jobs have been attributed to exemptions. The exemptions are granted by a state board without approval of local governments that lose tax money. No evaluation is done to determine if investments would occur without subsidies. The exemptions are unusually generous at 100% for 10 years. Reforms are recommended like requiring local approval and limiting exemptions based on return on investment.

1. Costly and Unusual:
an analysis of Louisiana’s Industrial Tax Exemption Program
June 2016
togetherlouisiana@gmail.com

2. in·cen·tive /inˈsen(t)iv/
• a thing that motivates or encourages one to do something;
• a concession to stimulate greater output or investment.
gift /gift/
• a thing given willingly to someone without the expectation
of anything in return; a present.

3. Rank State Corporate Subsidies
1
2
3 Michigan $14,199,793,452
4 Washington $13,378,264,962
5 New Jersey $8,900,756,858
6 Indiana $8,142,816,408
7 Kentucky $7,725,418,949
8 Texas $6,653,709,245
9 Oregon $6,653,054,666
10 Missouri $5,505,983,189
11 Pennsylvania $5,011,816,496
12 Illinois $4,875,121,771
13 Ohio $4,637,654,611
14 North Carolina $4,494,206,385
15 Connecticut $4,246,915,669
16 New Mexico $4,067,819,794
17 Tennessee $3,804,492,345
18 Mississippi $3,804,387,807
19 Florida $3,450,556,194
20 Alabama $3,413,018,766
21 Nevada $3,174,859,740
22 Iowa $2,908,329,068
23 California $2,670,247,463
24 South Carolina $2,533,880,431
25 Minnesota $2,421,601,745
26 Wisconsin $1,832,327,312
27 Oklahoma $1,667,965,854
28 Georgia $1,522,717,351
29 Massachusetts $1,121,502,357
30 Maryland $1,020,557,805
31 Utah $1,000,738,632
32 Kansas $793,317,346
33 Colorado $773,824,248
34 Arkansas $682,215,269
35 Maine $681,443,625
36 Alaska $676,803,280
37 Virginia $565,547,785
38 Rhode Island $462,565,091
39 Nebraska $443,936,362
40 Arizona $435,037,197
41 West Virginia $426,777,726
42 Vermont $336,895,134
43 Delaware $324,280,692
44 Idaho $310,702,207
45 South Dakota $123,437,018
46 North Dakota $110,524,376
47 Montana $48,810,402
48 New Hampshire $8,382,095
49 Wyoming $1,226,569
50 Hawaii $515,430
Rank State Corporate Subsidies
Subsidy Tracker, “Good Jobs First,” (2015): http://subsidytracker.goodjobsfirst.org/top-states
19.7 million
4.6 million
Population
Overall Corporate
Subsidies
by State
Louisiana $16,659,935,692
New York $23,974,689,789
Industrial Tax
Exemptions are
#1 source of
public subsidies
for corporations
in Louisiana.

4. $1,950
$1,895
$1,750
$1,676
$1,433
$1,275$1,234$1,214$1,181
$1,118
$996
$936$917$908
$704
$581$538$524$512
$452$444$438$430$400$392$378$347$340$318$273$247$236$231$228$190$173$171$166$151$149$145$144
$69$68$65$48 $6 $2 $0
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000 LA
NM
WA
KY
OR
MI
MS
IN
NY
CT
NV
NJ
IA
AK
MO
AL
TN
VT
SC
ME
NC
MN
RI
OK
OH
PA
IL
DE
UT
WI
KS
TX
NE
WV
AR
ID
FL
MD
MA
GA
ND
SD
CO
CA
VA
AZ
MT
NH
WY
HI
Corporate subsidies per capita by State
US average: $633 per capita
#1) Louisiana: $3,583 per capita
Highest per capita corporate
subsidies in the nation.
Nearly twice the rate of the next
highest state (New Mexico)
5 TIMES the than
national average.

5. Cost to local governments of
current exemptions:
$16.7 billion
(over 10 years)
Public subsidy per
permanent job created: $535,343
# of permanent jobs attributed to
exemptions by companies
receiving subsidies (over 10 years):
31,150
Source: Louisiana Economic Development, “Assessors Reports: Industrial Tax Exemption” (June 10th, 2016).
Industrial Tax Exemption Program

6. Louisiana’s Industrial Tax Exemption
Manufacturing entities are eligible for exemption
of 100% of local property taxes on value of new
investment.
Exemptions last for 10 years, in two 5-year increments.
Exemptions are granted for new or expanded
manufacturing facilities and for routine replacement of
machinery and equipment.

7. LOCAL property tax revenue is being exempted (i.e. funding for
local school districts, parishes, cities, sheriffs, libraries, parks, etc.)
But a STATE board (Board of Commerce & Industry) grants
the subsidies, without the approval of the local governments
losing the exempted tax revenue.
Louisiana’s Industrial Tax Exemption
Only tax exemption program in the nation in which a state
body gives away the tax revenue of local bodies, without
their approval.

8. Tax Foundation assessment:
Location Matters (2015).
“Louisiana offers the lowest overall tax burden in the country
to new operations, due less to its overall tax structure than to
unusually generous incentives programs.
New capital- and labor-intensive manufacturing firms
experience effective tax rates at or under 0.1 percent due to
some of the most generous property tax incentives and
withholding tax incentives in the nation.”

9. 4 things make Louisiana’s Industrial Tax Exemption
extremely unusual …
#1) There is no process of evaluation of return on investment and assessment of
whether subsidized investments would have happened even without the
subsidies. The program is structured as an entitlement, not an incentive.
#2) The local governmental bodies whose property tax revenue is being offered
as a subsidy have no say in whether their own money is granted as subsidies.
#3) All local jurisdictions (including school districts) are subject to the exemption.
(Programs in most states forbid the exemption of school district taxes.)
#4) It is (as the Tax Foundation put it) “unusually generous” – a 100% exemption
for 10 years.
Property tax exemptions for manufacturing projects
are not uncommon in other states.

10. Programs in other states are very different …
Alabama
Requires local approval by each governmental
jurisdiction abating its own property taxes. School
district taxes cannot be abated.
Arkansas
Payment in Lieu of Taxes (PILOT) program. Maximum
abatement is 65% of would-be property taxes.
Requires local approval by government jurisdictions whose
revenue would be foregone.
Florida
Each county seeking to implement an abatement program
must hold a referendum of voters to approve its creation.
All abatements require local approval of each jurisdiction
offering subsidies. Detailed reporting and selection
criteria guide “return on investment” evaluation.
Georgia
Direct property tax abatements are unconstitutional.
Complex “Bond-Lease Program” as workaround.
All aspects require approval of local entities offering
the abatement.
Mississippi
Fee in lieu of property taxes, with maximum abatement at
66% of would-be property tax levy.
School taxes cannot be abated. Requires approval of local
governing authorities whose revenue would be foregone.
Texas
Abatements require approval of each local
governmental jurisdiction abating its tax revenue.
School district taxes may not be abated.
SEE APPENDIX A FOR DETAILED PROGRAM
DESCRIPTIONS FOR EACH STATE.
Louisiana’s program is unique in the nation for having one governmental entity (a state
board) exempting tax revenue belonging to other entities, without their approval.

11. How much is the Industrial Tax
Exemption costing local parishes?
Cost of active property tax
exemptions (10-year total)
Jefferson $192 million
Orleans $133 million
St. Charles $1.3 billion
East Baton Rouge $664 million
Ascension $1.3 billion
Iberville $737 million
Calcasieu $2.97 billion
$5.3 billionCameron
PARISH
Source: Louisiana Economic Development, “Assessors
Reports: Industrial Tax Exemption” (June 10th, 2016) &
Louisiana Tax Commission, “Annual Report” (2015).
SEE APPENDIX B FOR BREAKDOWN OF
FOREGONE REVENUE FOR EVERY PARISH.

12. How much is ITEP costing parishes, school
districts & local services with dedicated millages?
Lost revenue
PER YEAR (total)
Sheriff / Police
/ Corrections
Parks &
Libraries
Parish Gov’t,
Levees, Other
School
Districts
Fire
Dep’ts
Roads &
Bridges
Health &
hospitals
Jefferson $4.2 million $2.5 million $3.5 million $440,000 $1.1 million $438,000$19.2 million $7.1 million
Orleans $3.7 million $900,000 $700,000 $155,000 $1 million $0$13.3 million $6.9 million
St. Charles $61.3 million $23.3 million $1.6 million $7.6 million $8.2 million $6.9 million$129 million $20 million
E.BatonRouge $26.7 million $8.9 million $5.4 million $79,000 $14.6 million $1.8 million$66.4 million $8.7 million
Ascension $74.1 million $18.6 million $4.6 million $0 $8.2 million $4.8 million$131 million $20.5 million
Iberville $41 million $15.7 million $467,000 $0 $5 million $0$73.7 million $11.6 million
Calcasieu $80 million $58.1 million $13.7 million $10.9 million $29.7 million $12.8 million$297 million $90.8 million
$136 million $104 million $18.5 million
$25.1
million
$39 million $95 million$532 million $115 millionCameron
PARISH
Source: Louisiana Economic Development, “Assessors Reports: Industrial Tax
Exemption” (June 10th, 2016) & Louisiana Tax Commission, “Annual Report” (2015).
SEE APPENDIX B FOR BREAKDOWN OF FOREGONE
REVENUE FOR EVERY PARISH AND LOCAL JURISDICTION.

13. In these 34 parishes, lost school district revenue exempted
under ITEP would be enough to implement universal pre-K:
Allen Allen Ascension Assumption
Beauregard Bienville Caddo Calcasieu
Caldwell Cameron DeSoto East Baton Rouge
East Carroll East Feliciana Iberville Jackson
La Salle Lafourche Lincoln Morehouse
Natchitoches Plaquemines Pointe Coupee Rapides
Red River Sabine St Bernard St Charles
St James St John the Baptist St Mary Washington
Webster West Baton Rouge West Feliciana
Cost to implement universal
Pre-K in Louisiana: $185 million per year
Cost of Industrial Tax Exemptions
to local school districts: $587 million per year

14. The Louisiana Constitution gives the Governor the
authority to reform the Industrial Tax Exemption
LA Constitution, Article 7.21
(F) Notwithstanding any contrary provision of this Section, the State
Board of Commerce and Industry or its successor, with the approval of
the governor, may enter into contracts for the exemption from ad
valorem taxes of a new manufacturing establishment or an addition to
an existing manufacturing establishment, on such terms and
conditions as the board, with the approval of the governor, deems in
the best interest of the state.
(“The power to approve or disapprove
is the power to reform.”)

15. Recommended Reforms
#1) For an exemption to be approved, each local governmental entity
whose tax revenue is in question must approve the exemption.
#2) Exemptions should be granted based on return-on-investment
analysis, selecting only proposed investments that would not take
place without the proposed subsidy (make the program an
“incentive”, not a “gift”).
#3) The amount and duration of exemptions should be brought into
alignment with those offered by other states (e.g. maximum
abatement 65% of property taxes owed).
#4) School District taxes should not be subject to the exemption.