BRAC’s quarterly magazine, Catalyst, serves as the region’s quarterly economic development update. Highlighting the regional economy, hot economic development topics, and the organization’s quarterly progress against its four strategic goals, Catalyst keeps Baton Rouge Area business owners, leaders and residents updated on all things economic development.
This quarter‘s cover story: A Call for Reform
The ever-changing Louisiana tax code has been discussed in political and businesses circles for what seems like an eternity. And with the state facing a $1 billion fiscal cliff in 2018, now is the time for decisions and actions.
In the Q3 Catalyst, BRAC invited Brandon Lagarde, a director in the Postlethwaite & Netterville Tax Services Group, and J.H. Campbell Jr., former president and CEO of Associated Grocers, to share their ideas of what tax reform could look like.
Lagarde and Campbell’s comments are their own, and do not necessarily reflect BRAC’s advocacy positions.
Brandon Lagarde, CPA, JD, LLM
“Louisiana’s fiscal woes can, and should be, combatted through two avenues: reigning in spending and maintaining or increasing revenue in a stable, responsible manner,” Lagarde says.
So how do we do this? Largarde suggests:
- Budgetary recommendations:
- Amend budgeting practices so there is no longer potential for spending beyond recurring revenues
- Determine if the state’s dedicated funds are serving the best needs of the people of Louisiana
- Endeavor to use revenue-needs forecasting, especially with respect to its largest expenses
- Sales tax recommendations:
- Do not extend the 1 percent “new penny,” but instead expand the sales tax base in order to lower the rate without decreasing sales tax revenues
- Create a uniform base at the state and local levels
- Income tax recommendations:
- Seek to eliminate the deduction for federal income taxes paid
- Stabilize the base by limiting or eliminating certain deductions and credits, such as the excess itemized deduction for individuals
J.H. Campbell Jr.
“To earn the trust of the populace, business, and industry, there must be transparency about any proposed fiscal and tax changes, said changes must follow a ‘plan of reform,’ and they must ultimately reverse and repeal the temporary measures approved during 2015 and 2016,” says Campbell.
What measures should replace those approved during 2015 and 2016? Campbell suggests:
- Assisting local government:
- Allow the Homestead Exemption to be locally determined and set by citizens of each parish
- Significantly overhaul the state sales tax structure
- Repeal and eliminate the “inventory tax” and its related tax credit
- Engage local governments in property tax abatement
- Reforming state taxation policies:
- Completely repeal or cap the corporate franchise tax
- Adjust the tax rates and the income brackets for personal income taxes, and eliminate the deduction of 100 percent of the federal income taxes paid
- Adjust the tax rates and income brackets for corporate income tax, and eliminate the deductibility of 100 percent of the federal income taxes paid
- Repeal and eliminate the sales tax on the sale of materials for further processing
- Establish a “floor” and “ceiling” for the severance tax on oil and natural gas so that the state can budget in low price environments, and doesn’t secure a windfall when pricing is high
- Permit the exclusion from taxation of up to $48,000 per person annually of state employee and/or teachers’ retirement
For an expanded view of Campbell’s vision, read his essay on tax reform here.