Baton Rouge, La. (October 19, 2021) – Today, the Baton Rouge Area Chamber (BRAC) announced supportive positions on Constitutional Amendments 1 and 2 that will appear on the November 13 statewide ballot. Early voting begins October 30, and BRAC encourages voters to support these amendments.
As the Capital Region’s lead economic development organization and an advocacy voice for the business community, BRAC has long supported policies that positively impact economic competitiveness and quality of life. With these amendments, Louisiana is poised to finally solve two tax reform priorities that have been studied over the past 20 years.
- SUPPORT: Constitutional Amendment 1 will create a commission authorized to streamline electronic filing, remittance, and collection of sales taxes across the state. The commission will develop a process that ensures accuracy, transparency, and accountability for those paying local sales tax and the local governments receiving the funds. This amendment has come from months of collaboration between local sales tax collectors, business groups, and state policy experts to resolve tax collection issues that have long damaged Louisiana’s economic climate and national perception.
The Louisiana Department of Revenue collects the 4.45% state sales tax, but separate collectors assigned by each parish collect local sales taxes. These collectors differ by parish and could be a school board, parish government, the sheriff, or the municipality. This disjointed system of tax collections is burdensome on companies, particularly small businesses, doing business in multiple parishes, as most parishes have differing understandings and policy viewpoints about sales tax applications and exemptions. A cooperative, statewide electronic tax filing system for businesses would drastically simplify this process and make the State of Louisiana much more business-friendly.
- SUPPORT: Constitutional Amendment 2 addresses the Federal Income Tax (FIT) deduction and lowers the tax rates to simplify the Louisiana tax code. The passage of Constitutional Amendment 2 will trigger several other tax code changes that would create a more straightforward system with lower rates. The resulting changes would:
- Cap personal income tax at 4.75% – the lowest rate in the South and fourth lowest in the country
- Remove current individual income tax brackets from the State Constitution, allowing the Legislature to lower rates
- Remove the FIT requirement from Louisiana’s Constitution
- Lower rates in the three personal income tax brackets, lowering the highest tax bracket from 6% to 4.25%
- Reduce the number of corporate tax brackets from five to three, capping the highest tax bracket at 7.5%
- Eliminate the Corporate Franchise Tax on the first $300,000 of taxable capital, and lower the tax from $3 to $2.75 per thousand on capital greater than $300,000
For years, advocates have argued for the necessity of eliminating deductions and lowering the effective tax rate on citizens. This amendment would remove federal deductibility, a deduction used only by two states in the country – Louisiana and Alabama. By doing so, Louisiana would have one of the lowest tax rates in the country, and 90% of Louisianans would pay less in taxes. In the end, a yes vote on this amendment would result in a simplified tax system and lower tax rates, encouraging in-migration, job creation, and increased business investment.
“The passage of these amendments will move Louisiana out of the bottom of the Tax Foundation rankings and put us on the path to greater job creation and greater economic opportunity for Louisiana families. BRAC fully supports creating a simpler, more predictable, and less burdensome tax system for Louisiana,” said Adam Knapp, BRAC president and CEO.
For more information about these and other statewide proposals on the November 13 ballot, BRAC encourages voters to review PAR’s Guide to the 2021 Constitutional Amendments.
About the Baton Rouge Area Chamber
The Baton Rouge Area Chamber (BRAC) leads economic development in the nine-parish Baton Rouge Area, working to grow jobs and wealth and improve the region’s business climate and competitiveness. Today, BRAC investors include more than 1,400 small businesses, mid-sized firms, large industry, and entrepreneurial startups, as well as individuals and organizations that support business and economic development. In this capacity, BRAC serves as the voice of the business community, providing knowledge, access, services, and advocacy. More information is available at brac.org.