Letter: Tax changes would push state forward

When deciding where to place major job-creating projects, corporate executives often choose among several states with comparable location advantages. Taxes usually are among their top site-selection criteria.

The Tax Foundation reports Louisiana’s state/local tax burdens for individuals and corporations are among the lowest in the country once our myriad state tax exemptions are considered. Yet our state’s tax structure often is poorly perceived because of its complexity.

More than 460 state tax exemptions totaling $6.8 billion dramatically narrow our tax base, meaning Louisiana requires every major tax type and generally average to above-average tax rates to generate the same level of revenue as other states with lower tax rates and/or fewer tax types.

States with simpler tax systems have a big advantage in economic development because corporate site-selection processes focus first on eliminating states based on high-level reviews that rarely consider the full range of available tax exemptions. Only later, if Louisiana makes the short list, may we learn about a project and be able to explain how our tax system works.

I’ve discussed taxes with hundreds of businesspeople nationally. Corporate executives, entrepreneurs and site-selection consultants favor simple, transparent tax systems with relatively low state/local tax burdens.

That’s largely why the much simpler tax structure in Texas is perceived so much better than ours, even though state/local tax burdens there are somewhat higher than in Louisiana.

Louisiana ranks No. 32 in the Tax Foundation’s state business tax climate index primarily because of our tax system’s complexity. Louisiana also doesn’t appear among the top states in tax rankings published by Area Development, Business Facilities, Chief Executive and the Small Business & Entrepreneurship Council. In contrast, Texas appears among the top 10 states in all five of these rankings.

Additionally, while nearly all other states have coordinated state/local sales tax administration, Louisiana has a fragmented system with dozens of different sales tax filings, creating administrative nightmares for many small businesses. We need a simpler approach.

Eliminating income taxes in a revenue-neutral manner and improving sales tax administration would dramatically simplify our tax system, reducing administrative headaches for families and small businesses.

Louisiana would climb from No. 32 to approximately No. 4 in the State Business Tax Climate Index. Moreover, Louisiana’s position would improve in a dozen other national rankings of tax competitiveness or business climate.

Most importantly, our state would become more attractive for business investment, meaning more and better job opportunities for Louisiana citizens and enhanced growth prospects for Louisiana’s small businesses.

Since 2008, we’ve implemented policy reforms that improved Louisiana’s business climate and helped enable our state to economically outperform the South and United States. Tax reform is the next big step to position Louisiana for a brighter economic future.

Stephen Moret, secretary

Louisiana Economic Development

Baton Rouge

Comments

1) Comment by phil - 21/02/2013

What amazes me is when politicians talk about how complicated the tax structure is in LA when it probably was politicians who created the mess in the first place. Of course, I realize that perhaps they were a different set of politicians. I have a proposal. Get rid of the State income tax over time in phases, but also leave all of the other taxes alone. Just get rid of the waste and possible corruption in government and let the government start decreasing taxes over time instead of increasing them. Also please stop changing those taxes into fees/fines that nobody gets to vote on again. I believe that a sudden combined increase in sales tax along with eliminating the state income tax will create more of a burden on the poor, elderly, and middle class who have less or no income. This has to be done carefully if it is done at all. All I can add is to recommend to the public -don't buy into a pig in a poke.

2) Comment by Marvin6 - 20/02/2013

Mr. Moret is one of Jindal's boys and is pushing Jindal's agenda. This will only help the haves and hurt the have nots even than Jindal has already done!!!

3) Comment by Maelstrom - 20/02/2013

Bulltwinkie. Our tax revenues have not only decreased the past 4 years, they have been over-estimated the past 5 years. Unless the state can show that revenues will increase under these tax changes, then this is the worst time to make the change. Our health care system and education systems have been devastated. The story of the dropping of LSU rankings, research dollars, emiment professors in the paper today just illustrates how counter-productive the previous cuts and policies have been. And the idea that we have one of the lowest tax burdens in the country but business doesn't know it? That is a farce. That's what they have accountants for. They know it, but taxes aren't the only thing that businesses focus on. Look at virtually any poll and educational environment is one of the top areas that are considered, along with crime and poverty and all of those we rank at the bottom. Instead of working on the thing upon which we already are ranked highly, it would make more sense to work on the things that we are ranked poorly and which are getting worse. BUT THAT WOULD INTERFERE WITH JINDAL's higher office ambitions.

4) Comment by Attila - 20/02/2013

This constant comparison of LA states like Texas, Florida, and Wyoming is nothing but a straw man. Texas has gazillions in oil revenue, Florida has gazillions in tourist revenue, and Wyoming does not have anywhere near the percentage of so called "poor people" that we do. Moret is nothing more than a wind up doll for Lil Booby's agenda. This is the same guy that said that he did not consider a large retail development in an area parish to be economic development because it merely moved tax revenue from one parish to another...go tell that to the people of the parish who lost out on the development. This is all about floating trial balloon's for Lil Booby's Presidential race. I predict if he does, in fact, decide to make a run, he will end up embarrassing himself and the state exponentially more than he did with that disaster of a response to the State of the Union address a couple of years ago...The real losers if this tax boondoggle is allowed to pass legislative muster will be the middle class...why am I not surprised?

5) Comment by DMJ - 20/02/2013

"Eliminating income taxes in a revenue-neutral manner and improving sales tax administration." And there's the kicker, folks. First of all, does anyone really think that Jindal and Moret have any intention of making this plan "revenue neutral"? I sure don't. Secondly, just what would "improving sales tax administration" mean? Raising sales taxes? Taxing more items? Just how would that help the "ehnanced growth opportunities for Louisiana's small businesses"? I know many small business owners who are against this because increased sales taxes will equal decreased sales. Notice how Mr. Moret didn't even mention how Jindal's plan would shift the cost of government from those with the most money to those with less, which even Republican State Treasurer John Kennedy said would happen. Simplify the tax code? Absolutely. But this plan isn't sounding any better than when it was first proposed.

6) Comment by SuzanneMS - 20/02/2013

How did we get from "Louisiana's tax code is too complex, with far too many exemptions," to "so we need to eliminate income tax?" Why not just eliminate those exemptions? If the myriad special interest deductions, exemptions, and rebates were eliminated, the tax code would be simpler, more transparent, and the income tax burden would be lower for everyone -- not just the special interests. He's really had to twist himself into a pretzel to blame taxes for the fact that businesses aren't locating here, with one of the lowest tax burdens in the country. It couldn't be the corrupt government, the high crime rate, the lack of an educated population, the lack of cultural and recreational amenities. No, it's the complexity -- yeah, that's it, the complexity. That's his story and he's sticking to it.

7) Comment by crazycajun - 20/02/2013

I wonder if Moret received permission from ALEC to make this comment. Don't you just love these "because I say it is" clowns? This administration has had to hide their real agendas to the very last minute to ram them through w/o much oversight. They are the masters of facades. Once you open the door there's nothing there. We'll have hell to pay trying to straighten this mess out for years to come. This from that open transparent good govt. they fooled ya'll with.

8) Comment by Mygulfbleedsforu - 20/02/2013

I'll throw in with the others. Even if you appeared to be a disinterested observer from outside the state, I'd have my suspicions. But a Jindal appointee? Come on... Besides, the Tax Foundation cares about one thing in its rankings -- low or no state and local tax. Once a state's environment is wrecked and unhealthy, its residents uneducated, unhealthy and hungry, its highways and bridges unsafe for travel, etc., the Tax Foundation will happily walk away with its rankings, revise its criteria, and look to the states that took care of their own well-being first.

9) Comment by swinham - 20/02/2013

I was going to sarcastically write about how nice it is to hear an objective view from one who has nothing to gain by taking this position, but postscript56 did a much better job by stating the case directly.

10) Comment by postscript56 - 20/02/2013

See, here's the problem, Stephen. Your letter is all ***** Oh, maybe some it is factual, for what that's worth. But the main purpose of tax reform has almost nothing to do with Louisiana. It's all about establishing Bobby's credentials. Your job is to rationalize that decision. So any letter you write is little more than propaganda. Bobby "believes" consumption taxes are "fairer" than income taxes. Well, maybe he does and maybe that's just as self-serving as his other "beliefs." But at this point I don't trust you or any other administration mouthpiece to act in the best interest of anyone other than Bobby.

11) Comment by Bighug - 20/02/2013

Removing state income tax and increasing sales taxes would make a large reduction in tax paid by the wealthy and add it to those with lower incomes. King Jindal knows where his donations come from.