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Louisiana’s School Readiness Tax Credits. Geoffrey Nagle, PhD Tulane University Institute of Infant and Early Childhood Mental Health September 23, 2013. [Your Teacher’s Name]. [Your School]. Why Tax Credits?. Tax policies can support the ends we want to achieve… School Readiness

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[Your Teacher’s Name]

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  1. Louisiana’s School Readiness Tax Credits Geoffrey Nagle, PhD Tulane University Institute of Infant and Early Childhood Mental Health September 23, 2013 [Your Teacher’s Name] [Your School]

  2. Why Tax Credits? • Tax policies can support the ends we want to achieve… • School Readiness • Quality Child Care

  3. Tax Credits, Tax Credits, Tax Credits Economic Development

  4. Existing State Tax Credits • Capital Companies CreditCapital CreditCredit for Basic Training SkillsCredit for Donation of Historic Property to StateCredit for Donations to Qualified PlaygroundsCredit for Hiring Eligible Re-entrantsCredit for Insurance Company Premium TaxCredit for Investment in a Louisiana FilmCredit for Property Tax Paid on Certain VesselsCredit for Qualifying Recycling EquipmentCredit for the Employment of Previously UnemployedCredit for Utility RefundsDedicated Research Investment Fund CreditEconomic Development Bond Cost CreditElectric and Natural Gas Cost Increase Credit

  5. Existing State Tax Credits • Historic Rehabilitation CreditInventory Tax CreditMotion Picture Employment CreditNew Jobs CreditNew Market CreditQuality Jobs ProgramResearch CreditTax Equalization Contracts CreditsTechnology Commercialization CreditTelephone Company Ad Valorem CreditUniversity and Biomedical R&D Parks CreditsEmployment of Drug Offenders Credit

  6. Economic Development

  7. Summary of Direct Effects • There are 12,701 businesses, employing 22,644 workers, serving 149,000 children and generating approximately $657 million in gross receipts.

  8. Employment by Industry, Louisiana

  9. Gross Receipts by Industry, Louisiana

  10. Multiplier Effects Input-Output analysiscalculates the ripple effects of an industry’s spending in the local economy. Direct Effects: Child care centers take in revenue. Total Value of Local Economic Linkages 1 Type I Indirect Effects: Centers make purchases thereby stimulating other industries. .33 Type II .39 Induced Effects: Workers spend wages.

  11. Output Multipliers by Industry, Louisiana

  12. School Readiness Tax Credits • Package of 4 Tax Credits • Credits to Providers • Credits to Directors and Teachers • Credits to Business for Supporting Child Care • Credits to Parents/Consumers

  13. TAX CREDITS TO CHILD CARE PROVIDERS

  14. Tax Credits to Providers • Providers receive a tax credit based on the number of children they serve in the Child Care Assistance Program (or in foster care) • Refundable credit • Both for-profit and non-profit centers are eligible

  15. Tax Credits to Providers

  16. Tax Credits to Providers • If you serve 10 CCAP children and you are a 2 star center, then you receive a $7,500 refundable tax credit! • 10 children x $ 750 (2 star center) = $ 7,500 • 10 children x $1,000 (3 star center) = $10,000 • 10 children x $1,250 (4 star center) = $12,500 • 10 children x $1,500 (5 star center) = $15,000

  17. TAX CREDITS TO TEACHERS AND DIRECTORS

  18. Tax Credits to Directors and Teachers • Refundable credits • Based on the level of education • Must be working at a center participating in the rating system • The star rating of the center does not impact this credit • Must work there at least 6 months

  19. Tax Credits to Directors and Teachers

  20. TAX CREDITS TOEMPLOYERS/BUSINESSES

  21. Tax Credits to Business • Employers receive a credit for “eligible child care expenses” based on the quality rating of the center • Refundable credits

  22. Tax Credits to Business

  23. Tax Credits to Business • Eligible Expenses • Employers may claim a tax credit for up to $5,000 in grants to child care resource and referral agencies. • This credit is dollar for dollar • Maximum is $5,000

  24. TAX CREDITS TO PARENTS/CONSUMER

  25. Tax Credits to Parents • Builds on the existing state child care tax credit. • Families are eligible for an increased tax credit based upon the quality rating of the center.

  26. Tax Credits to Business

  27. SRTC IMPACT 5 Years 2008-2012

  28. Tax Credits to Parents 14,695 12,956 7,035 4,664

  29. Tax Credits to Providers 516 259 123

  30. Tax Credits to Teachers 3,351 3,082 1,743 874

  31. Tax Credits to Businesses 337 209 91 141 41 30

  32. Total Impact

  33. Total Impact 74% 99%

  34. Licensed Centers Participating

  35. Subsidized Children by Star Level (under age 5)

  36. Lessons • Diversify portfolio • Tax strategies should not replace direct funding • We need both

  37. References Quality Start Child Care Rating System www.qrslouisiana.org LA Department of Revenue http://revenue.louisiana.gov/ In Search bar, type in “School Readiness”

  38. THANK YOU Geoffrey Nagle, PhD gnagle@tulane.edu (504) 988-8241

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