The following are some of my notes and thoughts from attending the Credits and Incentives session at the Paul J. Hartman State and Local Tax forum last week, presented by Chris Grissom, Robert Boehringer and Ron Rabkin.
- All politics are local.
- Taxpayers often obtain multiple letter rulings for credit and incentive deals due to the sophistication of the rules.
- Credits and incentives are the opposite of simplification. Similar to market-based sourcing and single-sales factor apportionment, credits and incentives pick winners and losers - shifting the tax burden to out-of-state taxpayers and/or to other tax types such as property taxes and personal income taxes. How does this impact schools? Does the positive outweigh the negative?
- Credits and incentives require so much knowledge of the deal, the incentive, the contacts at the jurisdiction, the procedure, etc. So many 'hoops' to jump through to obtain an incentive. Is it fair to have a system that requires so much investment of time, money, and energy? Those who are unwilling, or unable to invest the time, money and energy lose out. Is that fair? You could miss out on a great incentive package simply because you did not hire the right person to negotiate for you? Is that what it should take?
- If a company makes an investment in a project before getting the credit and incentive, did the company actually need the credit and incentive?
- Credits and incentives require companies to 'tell the story.'
- Is everybody 'winning'?
- What tool are you using to determine the type of credits and incentives that will benefit your company the most? A modeling tool or excel spreadsheet? Using the right tool will allow your company to negotiate with a state/city to get the right incentives package (i.e., incentives you can actually use).