Allain: Tax reform needed to make La. competitive

FRANKLIN — State legislators will consider what state Sen. Bret Allain, R-Franklin, considers “the most ambitious tax reform plan” ever offered in Louisiana when the 2021 session opens April 12 in Baton Rouge.
Allain, who is the chairman of the Senate Revenue and Fiscal Affairs Committee, told the audience during Wednesday’s St. Mary Chamber of Commerce legislative breakfast that plans include decreasing personal and corporate income taxes and at least reducing the franchise tax.
After taking over as chairman last year, Allain said, he met with tax rating commissions in Washington, D.C.
“I asked them all the same question: ‘Why have you rated Louisiana so poorly?’” Allain said.
The state is ranked in the 40s nationally among states by the Tax Foundation, while the Council on State Taxation gave the state a D-minus grade. Despite being “fairly competitive” among states in the impact of taxes on its citizens and businesses, Allain said, an outdated tax system and tax practices are what hurts Louisiana.
“They’re not going to reward us for having bad tax policy,” Allain said. “It’s a detriment to attracting capital, and business and people to come to Louisiana.”
And people are on the move, too.
According to the U.S. Census data, Allain said, many people are leaving other states but are going to Florida, Texas and Tennessee.
“They’re moving to the South, but they’re not coming here,” he said.
Until there are changes in taxing practices, Allain said he thinks they won’t come here, either.
With some tax reform changes, Allain said the state could jump to a grade of B from the Council on State Taxation, while they also could see a jump from in the 40s to the mid-20s in the Tax Foundation’s ratings if tax reforms are successful.
“We’re going to attempt to do it,” Allain said. “We’re going to need your support. Four of the bills are going to be constitutional amendments. I’ve got to get two-thirds of the majority in both houses. Very high bar.”
Then, the people will have to vote on the bills.
Allain and Rep. Stuart Bishop, R-Lafayette, are working together on tax reform. Bishop is in charge of the House Ways and Means Committee.
The St. Mary Parish senator said a reduction in personal income taxes would make the state a more favorable destination for others. Eliminating the federal income tax deductions are a goal, too.
“We’re going to get off the rollercoaster of the federal income tax deduction and do away with that, because every time the feds up the tax and down the tax, we lose or gain revenue,” Allain said. “We can’t be on this rollercoaster anymore.”
For those who used the federal tax deduction, they would receive breaks in their taxes under the legislation instead, Allain said.
“We’re going to try to keep it revenue neutral for now, and the plan is into the future, let’s drive it down even further with triggers to see if we can’t reduce it all the way down,” he said.
The goal is the same changes to corporate income taxes as personal income taxes in order to draw businesses here.
The senator also addressed other taxes, including franchise taxes and centralized sales tax collection.
“I can’t think of anything that’s more detrimental to attracting people to invest capital in the state of Louisiana, (because) once you bring the capital here, you tax the capital. … We’re going to reduce or eliminate that,” Allain said of franchise taxes.
Centralized tax collections to collect internet sales taxes are proposed in a bill by another legislator. Allain said it is critical to collect these, because it will help Louisiana. He said it also will level the playing field between companies like Amazon and those who have “brick and mortar” businesses.
Allain cited Mississippi, which was received about $5 million in sales taxes from the internet two years ago before adopting the practice of collecting these taxes. At the time, Louisiana brought in $7 million in these collections.
“Now that they fully implemented their plan, they’re projecting this year they’ll collect $400 million worth of sales taxes from the internet,” Allain said of Mississippi. “Guys, we’ve got to get on the bandwagon, we’ve got to get this done.”