David Jacobs, The Center Square | July 30, 2019
Three Republicans at a public event Monday night said simplifying the state’s complex tax structure is easier said than done but agreed reform is necessary.
In general, the state’s tax rates are relatively high, though a plethora of exemptions means the effective tax burden for many taxpayers is relatively low. Critics argue this situation unduly advantages those who can afford to hire attorneys and accountants to game the system.
“You’ve got all these exemptions and deductions, and what that creates is this big feeding frenzy of special interest groups that come to the capitol when you try to do anything reform-related,” state Sen. Rick Ward, a Port Allen Republican, said at the event hosted by the Louisiana chapter of Americans for Prosperity, a national conservative advocacy group.
Ward mentioned a representative of an unnamed business who called to complain about a proposal to eliminate a number of corporate tax exemptions while creating a single and relatively low corporate income tax rate. The person said the bill would cost their business $30 million.
“Do you realize for you to save $30 million, that means there’s a whole lot of people out there having to pay a whole lot more money?” Ward recalls saying. The caller, apparently, was unmoved.
Ward said cutting down on corporate tax breaks would require “average citizens” and small-business owners showing up at the capitol to call for change.
But when it comes to tax breaks, corporations are “not the bad guys,” said Rep. Rick Edmonds, R-Baton Rouge. Businesses are paying their fair share and providing jobs, he said.
Reining in tax breaks should be part of a larger effort toward a more stable, predictable system, he argued.
“We have to have a package [of changes],” Edmonds said.
Without the state’s controversial industrial property tax exemption, better known as ITEP, southwest Louisiana probably would not have landed Sasol, he said.
“We’re talking in sound bites,” said Rep. Tony Bacala, R-Prairieville. “Be careful: What sounds really simple is really not simple.”
A recent proposal for a flat corporate tax rate was soundly rejected by voters, he said, speculating that people saw the word “tax” and voted against it.
Tax exemptions amount to more than $6.6 billion, Bacala said. But most of that total is not “corporate giveaways.”
Louisiana consumers don’t pay sales tax on groceries for home consumption, for example. Many taxpayers are eligible for a child tax credit, he added.
“This isn’t somebody else [benefiting],” Bacala said. “This is me and you.”