HOUSTON, Aug. 31, 2015 /PRNewswire/ — On August 20, alliantgroup hosted U.S. Senator David Vitter (R-LA) in a meeting on tax policy issues and their impact on Louisiana at the firm’s headquarters in Houston. In a roundtable discussion that included Louisiana business owners as well as former U.S. Congressman Rick Lazio and former Senior Counsel to the U.S. Senate Finance Committee Dean Zerbe, the meeting focused on the steps that Louisiana can take in creating an environment more conducive to the success of the state’s small and mid-sized businesses.
During the meeting, Senator Vitter pledged his support for policy efforts that would create high quality jobs and make the state’s middle market companies more competitive. To achieve this goal, Vitter emphasized the importance of encouraging innovation among state businesses—particularly among smaller businesses and startups—referring to these companies as the “true engines of our nation’s economy.” According to Vitter, the most competitive companies are those that invest in the newest technologies and latest trends that will, in the long run, improve the quality of the products and services offered by those businesses and spark future growth.
Traditionally, small businesses and startups have been some of the most innovative companies and the ones primarily responsible for creating new jobs. In Vitter’s eyes, for broader economic prosperity to occur within Louisiana, the state’s smallest and newest businesses will be the key—and pushing policy that supports these businesses rather than hampers their ability to remain competitive will dictate the future performance of the state’s economy.
“First and foremost, our goal should always be to pursue policy that helps small and mid-sized businesses, not regulations that will ultimately impede growth,” said Senator Vitter. “Rest assured, Louisiana state businesses will always have my backing in pursuing laws that will give them every opportunity to remain competitive.”
With an eye toward the broader economy and tax policy, the focus of the meeting shifted to individual state laws and their impact on businesses—specifically, those laws and regulations surrounding the Louisiana state R&D tax credit. At one point, the Louisiana state R&D tax credit was one of the strongest tax credits in the nation. In 2009, the Louisiana governor signed into law a statute that had the effect of making the credit refundable and available for small businesses and startups.
However, the gains that were made in making the state R&D tax credit more available have largely been rolled back in recent years, due to both legislative and compliance changes. In 2011, the Louisiana Department of Economic Development (LED)—the department that administers the credit—heightened their standards and began denying research credits for small businesses (defined as under 50 employees), even though the activities completed by these companies satisfied the federal definition of qualified research. These new standards were applied retroactively. In 2013 the Louisiana legislature—at the request of the governor’s office—first severely curtailed the R&D tax credit and in 2015 ended the refundable credit.
Illustrating the impact that tax policy can have on small and mid-sized businesses, the Louisiana business owners in attendance highlighted to Senator Vitter their experience in claiming the credit. Both owners had applied in good faith for the credit—expending time, energy and dollars—only to be rejected as the LED changed the rules after they had applied for the credit. There are approximately 150 small businesses in Louisiana that in good faith applied for the R&D tax credit that were summarily denied by LED as well.
“We have done a lot better in 15 years in terms business climate and economic development with things like this,” said Vitter. “But obviously this sort of arbitrariness is a step backward … this element of arbitrariness is really damaging in my opinion.”
Further elaborating on their personal accounts, General Counsel Walter “Beau” J. Baudier III of Design Engineering, Inc. and President of Certified Limb & Brace, Henry “Hank” Richter, discussed the negative results of the credit’s compliance burdens. Baudier’s family run civil engineering business, founded originally by his father, is a successful company working on several major federal projects. The firm was also responsible for building the only levees that withstood Hurricane Katrina.
Richter’s company designs and manufactures prosthetic limbs and braces for patients and the medical community. His business was the first to introduce CAD/CAM technology in the prosthetics industry and has received several patents for such work. Both innovative companies performing the kinds of projects R&D tax credits are designed to reward, after prior years of claiming the credit, both were barred from qualifying due to the increasingly restrictive laws and compliance issues on small companies.
“Just drying up one portion of the program and keeping the others, that is our rub,” said Richter in reference to the state R&D credit.
Taking into account the concerns of small business owners, Vitter discussed the need for the state to be predictable and fair in their treatment of all businesses, stating that he would reject any regulatory treatment that would reverse the gains made over the last 15 years that have made Louisiana a place where small and medium-sized businesses can prosper.
“We want to reward innovation and incentivize Louisiana’s innovators—they are the people who will be a part of the new Louisiana economy,” said Vitter. “We need to treat people right. We made a promise.”
alliantgroup’s mission is one of education and awareness—we exist to help industry organizations, U.S. businesses and the CPA firms that advise them, take full advantage of all federal and state tax credits, incentives and deductions available to them. Our government has legislated these powerful incentive programs to help businesses grow and successfully compete both in the U.S. and abroad. We are proud to have helped over 20,000 businesses claim more than $5 billion in tax incentives! alliantgroup’s headquarters is in Houston, Texas, with offices across the country including New York, Boston, Chicago, Orange County, Sacramento, Orlando, Indianapolis and Washington, D.C.