Louisiana lawmakers have begun to take a holistic look at the state’s tax system, with a vow to make recommendations that may include the elimination of the state’s income tax levied on both individuals and corporations.
The House Ways and Means Committee last week began a series of meetings to examine Louisiana’s tax structure, with a focus on reforming the number of state tax exemptions and credits that are allocated by the state Legislature. The tax reform efforts come in the wake of the passage of a resolution authored by state Rep. Richard Nelson (R-Mandeville) earlier this year.
The panel will also examine the assistance the state provides to local governments in the form of revenue sharing, use tax deductions and credits for their operating expenses.
“To fully evaluate the effectiveness and efficiency of the state’s current tax system, a systematic review should be done of the relationship between the state’s revenue-raising system and its interplay with local government’s ability to raise sufficient revenue so that local governments rely less on state resources to address their local funding needs,” the resolution states.
The New Orleans-based Pelican Institute for Public Policy, a non-profit research organization, agreed that now is the time to take a hard look at the state’s tax system.
“The time has come to fundamentally change Louisiana’s tax code,” Daniel Erspamer, the Pelican Institute’s CEO, told the Louisiana Record in an email. “Our punishing and complex tax structure has driven a generation of our friends and family to seek jobs and opportunity elsewhere. To write Louisiana’s comeback story – and stay competitive with neighboring states currently lowering or eliminating their income tax– we must act boldly and swiftly.”
Examining such tax issues will ultimately be good for Louisiana families and the state’s ability to generate job growth in the future, Erspamer said.
The Louisiana state director of the National Federation of Independent Business also welcomed state lawmakers’ plans to discuss the idea of eliminating the state’s individual income tax.
“This would be a big deal for small business owners,” Dawn McVea said in a prepared statement, noting that about 75% of small business owners file their taxes by paying the individual rather than the corporate rate.
“... This is something we’re keeping a close eye on.”