Set in real Louisiana bayou country, A&E’s popular reality series Duck Dynasty follows a brood of real-life brothers who manufacture duck calls and love to go bird hunting. The bearded brothers have generated their share of controversies, including over gay rights and religion. And now, we can add taxes to the list of subjects they may tend to inflame.
In 2013, patriarch Phil Robertson gave an interview with GQ that inflamed the public, causing advertisers to squirm. In fact, the Cracker Barrel chain pulled Duck Dynasty items from stores. After a backlash, the 625-outlet chain changed its mind and put Duck Dynasty products back on the shelves. This time, though, the bearded ones could have an unlikely champion in the form of Louisiana Governor Bobby Jindal.
When it comes to money, some people are starting to draw comparisons between the value of education and the value of Duck Dynasty. The Louisiana state budget is still hurting, and where can we cut? Duck Dynasty gets rich state benefits, but Republican Governor Bobby Jindal doesn’t want to mess the tax credits that make his state a big draw for TV and movies.
How much are the tax credits worth to the show? Louisiana has issued more than $1 billion in credits over the past 12 years. In the case of Duck Dynasty, the take amounts to as much as $415,000 per episode. That makes the Louisiana tax credit program the nation’s most generous. Gov. Jindal is under pressure to cut the tax breaks but says he won’t.
A $1.6 billion shortfall led Moody’s Investors Service to downgrade Louisiana debt. Although scaling back tax credits could help, Mr. Jindal says no. Louisiana pioneered movie credits, approving the program in 2002. The credit has created more than 33,000 jobs, two-thirds of them in tourism, according to an industry-commissioned survey. It found 14 percent of recent visitors had seen a Louisiana-based movie or TV show.
But transferable credits can lead to abuses. Many film-production companies are limited liability companies. As they do not pay corporate taxes in Louisiana, they are allowed to sell their credits to others who can use them. They are also allowed to sell them back to the state for 85 cents on the dollar.
There have been abuses, prosecutions, and convictions over various schemes to inflate the credits and get more money. In that sense, there is an odd serendipity about Duck Dynasty and taxes. It turns out that ducks have played a part in selling the income tax. Few Americans had to pay income taxes until 1942. The Revenue Act of 1942—also called the Victory Tax—ramped up the income tax to make a whopping 75% of Americans ‘eligible’ to pay federal income tax.
But in 1942, millions of people had never filled out a tax form or dealt with taxes. To ease that transition, where do you begin? There was significant concern that regular old Americans might not know how to pay their taxes, and in any case needed some goosing. And who better than a household duck? The Secretary of the Treasury turned to Walt Disney to sell the tax. Disney cast the popular Donald Duck as the star of his animated 1943 film, The New Spirit.
For alerts to future tax articles, follow me on Forbes. You can reach me at Wood@WoodLLP.com. This discussion is not intended as legal advice, and cannot be relied upon for any purpose without the services of a qualified professional.
via The Tax Lawyer http://ift.tt/1zwnCkz