Louisiana should adopt fiscal reforms, including tax policy changes, so the state is better positioned to withstand future disruptions, according to a new report.
In a report released November 20, the Resilient Louisiana Commission established by Gov. John Bel Edwards (D), offered near- and long-term recommendations to help the state move forward from the COVID-19 pandemic.
In a news release, the governor called on elected officials, the general public, and the private sector to join him in acting on the recommendations, which come on the heels of a special session that passed legislation aimed at providing relief for taxpayers affected by the COVID-19 pandemic and recent hurricanes.
Department of Revenue Secretary Kimberly Robinson, who served as an ex-officio member of the commission, said, “To attain more resilience, our state needs appropriate levels of funding to provide for adequate public services and foster widespread, attainable opportunities for its people.”
“A fair and balanced tax structure can help us achieve this goal,” Robinson said.
In the long term, “this moment provides an opportunity to enact policies that address the more acute problems created by COVID-19,” the report says. “Officials can support economic competitiveness by enacting modern tax and regulatory standards that will position the state to attract and retain the best companies and workers.”
To that end, the commission recommends a simplified and broader tax structure, saying it “will make Louisiana more competitive, provide greater stability and predictability for revenue, and is fairer to all taxpayers.”
The commission says the state should consider evaluating deductions and credits for possible elimination and broadening the tax base and lowering rates. The commission also recommends simplifying the state’s business tax structure and modernizing and streamlining sales tax collections.
To help increase economic inclusion, the commission recommends enhancing the state’s earned income tax credit or establishing a minimum wage that is higher than the federal amount. The report says the state should maximize programs like federal Opportunity Zones, community development block grants, and tax-exempt bonds to support mixed-income and affordable housing.
Regarding tax incentives, the commission says they must target sustainable industries and jobs to create growth.
The state should “evaluate and modernize incentives to ensure they are targeting high-paying, growing industries,” the report says. The state should also renew the Louisiana New Markets Tax Credit, expand the angel investor tax credit to allow for a larger tax allocation for investments that “promote inclusivity and equity,” and consider incentives for building owners who are updating properties to help prevent the transmission of infectious diseases, according to the report.
In May the commission recommended that the state consider eliminating the corporate franchise tax, address net operating loss deductions, and develop a parish-by-parish tax relief program and guidance for property taxes, according to the report. To improve regulatory efficiency, the commission recommended waiving or reducing penalties for taxpayers who are involved in disputes. The commission also said the state should consider developing a state infrastructure investment package that is funded by a gas tax and/or other revenue streams.
The commission did not respond to a request for comment by press time.