A Lawmaker's Guide to Targeted Tax Breaks

Alert observers of the just-beginning Louisiana legislative season probably noticed when a House committee approved what is universally described as a "tax cut for General Motors" last week.

So how do you enact a tax cut for just one company? Here's the clever way: call it a tax break for "machinery and equipment used by a motor vehicle manufacturer with a North American Industry Classification System (NAICS) Code beginning with 3361." That's what the bill, House Bill 633, says.

This isn't to say that there's anything sneaky or underhanded about the bill's language, or even that the proposal is a bad one. There's open agreement among lawmakers that the proposed tax break, which weighs in at a cost of $1.2 million, is designed specifically to benefit the General Motors plant in Shreveport. No one's concealing this. And exempting manufacturing inputs from the sales tax is the right thing to do: sales taxes are supposed to fall on retail sales, not the costs incurred by manufacturers. But it's interesting to see how effortlessly lawmakers can channel tax breaks exactly where they want to without actually naming the beneficiary.