Louisiana’s Best — and Worst — Economic Development Incentives: What Experts Say

Tax incentives remain one of the most debated tools in Louisiana’s economic development strategy. Supporters argue incentives can tip the scales on deals that create jobs and revitalize communities. Critics counter that many programs offer costly benefits with inconsistent returns.

In 2023, Louisiana issued more than $500 million in incentive programs, including $150 million for the Quality Jobs Program, $134 million for the Motion Picture Investor Tax Credit, and $86 million for the Rehabilitation of Historic Structures Tax Credit. Whether those investments pay for themselves depends on how the numbers and outcomes are measured.

In this installment of One Big Question, Louisiana Trade & Commerce asked a diverse group of leaders and experts: What are Louisiana’s best economic development incentives — and what are the worst? Below is a summary of their perspectives, edited for clarity and length.

Michael Hecht, President and CEO, Greater New Orleans, Inc., highlights the historic tax credit as one of the state’s most successful incentives. He argues that these credits meet the classic “if-not-but-for” standard: many redevelopment projects would not be financially viable without them. Across Louisiana, the credits have helped restore historic buildings and catalyze commercial activity. As for less effective programs, Hecht points to the Enterprise Zone (EZ) Program. He notes that the value of the credit was not significant enough to change investor behavior, meaning the program often subsidized investments that would have happened anyway.

Jan Moller, Executive Director of Invest in Louisiana, cites the Industrial Tax Exemption Program (ITEP) as Louisiana’s most problematic incentive. He argues the program has allowed nonelected state officials to grant large property tax exemptions with limited local input, costing parishes significant revenue. Moller also notes that companies have sometimes received exemptions for investments that reduced, rather than increased, local jobs. On the positive side, Moller highlights LED FastStart, calling it a strong incentive because it provides customized workforce training directly aligned with employer needs. He argues that the most effective economic development tool is not a tax credit, but a strong workforce, reliable infrastructure, and safe, vibrant communities.

Daniel Erspamer, CEO of the Pelican Institute, expresses skepticism toward incentives that give government the ability to pick winners and losers. He favors broad, open-access tools that create opportunity without distorting the market. Erspamer identifies the film tax credit as one of Louisiana’s least effective incentives, noting that many benefits flow to out-of-state companies and that the program has had limited long-term economic impact for Louisiana workers.

Patrick Button, Economics Professor at Tulane University, argues that incentives work best when they are narrowly targeted to overcome specific barriers, such as capital access challenges for small businesses or administrative burdens that prevent market entry. These types of incentives, he says, can help firms that otherwise would not be able to participate in the market. He notes that broad incentive programs — including many film and large industrial relocation incentives — often produce limited results. Research shows that incentives rarely change business decisions except in the very final stages of site selection.

Susan Bourgeois, Secretary of Louisiana Economic Development, says Louisiana’s overall tax structure is both the best and worst incentive the state has to offer. Prior to reforms passed last November, Louisiana’s tax policy was complex and burdensome, deterring investment and expansion. With the recent reforms, Louisiana has jumped from 29th to 10th nationally in corporate tax competitiveness. Bourgeois describes incentives as the “coupon” that helps close a deal, while strong tax policy is what attracts businesses in the first place.

Louisiana’s incentive landscape is complex and evolving. Some programs, like historic tax credits and customized workforce training, receive wide praise. Others, including ITEP and the film tax credit, face criticism for offering weak returns or distorting local tax bases. What every expert agrees on: incentives must be paired with strong fundamentals — competitive tax policy, a high-quality workforce, safe communities, and solid infrastructure — for Louisiana to win in a modern economy.