Although the company has lost nearly $ 1 billion in revenue, a number of state legislatures are putting together laws to restructure the taxation of people and businesses in Louisiana with the overall goal of lowering income tax rates.
Political leaders have been talking about the need to overhaul the state’s tax system for decades. However, the legislature – some work independently, others work in a team – says this year’s efforts could succeed in changing the archaic structure of high initial rates but low collections due to myriad breaks and exceptions.
“People across the political spectrum can agree that the Louisiana tax system needs a lot of help,” said Jan Moller, director of the Louisiana Budget Project, a Baton Rouge research group that advocates action for low and middle income people . “Many of the ideas are not thinkers. We generally agree. But it’s the details, it’s always the details. “
Traditional thinking is that tax reforms can only take place during a tax meeting, i.e. only odd-numbered years and only in non-election years. 2017 was a missed opportunity. 2019 was a year when all lawmakers and all statewide officials, including the governor, would be elected. 2023 will be the next country in the state elections. That said, 2021 may be the only chance for the next few years.
The Louisiana Association of Business & Industry, the largest and most influential business lobby in the state, had considerable influence …
“All arrows point to this session so that something can happen. Nobody knows whether it will succeed. Tax reform is really difficult, ”said Robert Scott, director of the Louisiana Public Affairs Research Council, a Baton Rouge political research group known as PAR.
“I don’t have a crystal ball,” said Senator Bret Allain II, the Franklin Republican who is part of a team that is putting a package together. “What I can say is that we will come up with a well thought out plan. We will try our best to sell it. “
Some changes require a simple majority in the House and Senate, while others require a two-thirds vote in each chamber.
Allain, chairman of the Senate Revenue and Taxes Committee, works with Rep. Stuart Bishop, Republican of Lafayette, who chairs the House Ways & Means Committee on Tax Letters, to create a package of five to seven bills Consider when the Louisiana legislature will meet on April 12th.
Allain said they are waiting for the estimates of how much money their ideas would remove or add to the state’s revenue stream.
Louisiana lawmakers on Tuesday passed the state’s $ 35 billion budget aimed at halting salary increases for government employees.
“Our goal is to lower the income tax rate as much as possible and create stability,” said Allain. “Let’s remove all the deductions and loopholes as much as possible and see how low we can get the rate.”
Houma Republican MP Jerome “Zee” Zeringue, who, as chairman of the House Appropriations Committee is the main sponsor of House Bill 1, the state budget for the fiscal year beginning July 1, is also working on laws requiring a flat-rate income tax rate, which means everyone would pay the same, lower rate.
“It will offer some consistency,” said Zeringue. “We have to change and update the way the state deals with its budget and make it fair and equitable. It’s a solid tax policy. “
Eliminating corporate income and corporate franchise taxes, which combined are projected to raise more than $ 500 million this year, would also require the removal of dozen of tax exclusions, credits, and tax exemptions that are now in the Tax Code.
Abolishing the franchise tax will be difficult. Only 12 states have franchise taxes and many of those states are in the process of phasing it out.
The group of lobbyists and business people who draws up the agenda for the Louisiana legislative leadership has their list of more than 4 …
“It’s really not a smart tax, but it’s such a big item,” said PAR’s Scott. “I don’t see this legislature blowing such a big hole in the revenue stream, so it’s important to see how they get rid of it.”
Legislators are also considering a tax break that most states have already abolished: the ability of Louisiana taxpayers – mostly the wealthier – to deduct their federal tax deductions from their state tax bill. That’s worth hundreds of millions of dollars annually, though the exact amount goes up and down each year depending on changes in federal tax law.
Legislators are also pioneering the idea of abolishing the inventory tax that is charging companies for the products that they have in stock and that are ready for trade. Only eight states continue to collect this tax, and Louisiana is the only one that calculates amounts owed based on the total value of inventory. In Louisiana, local governments levy inventory taxes on companies. The state then repays the collected amount to the company.
Allain tried for years to get rid of the tax and its complicated system. Local and municipal administrations are against it.
“The locals don’t want to give up the revenue and they really don’t trust us to replace them in a way they are comfortable with,” said Allain.
When it comes to belittling Louisiana’s outdated and inefficient tax legislation that has been criticized by analysts on both left …
John Gallagher, director of the Louisiana Municipal Association, agreed.
“We discussed this for years,” said Gallagher. “The only way (for local governments) to keep it up is to increase the millages,” which determine how much property taxes individuals and businesses pay.
However, Gallagher said that local and local governments are working with state lawmakers on several administrative proposals, such as centralized sales tax collection.
In general, Louisiana is one of the few states where sales taxes are levied at a local rather than a statewide level. Gallagher said local governments are considering a process that will allow for centralized collection while maintaining local authority.
When businesses look for a facility, Louisiana often loses due to its tax structures, argued Allain. “Companies look to the top line and then go to Texas or Florida or somewhere where the tax structure is less complicated.”