A broader and simpler tax structure would be fairer to taxpayers, provide a more predictable revenue stream for government, and make Louisiana’s economy more competitive with the rest of the nation, according to the Resilient Louisiana commission.
Gov. John Bel Edwards created the commission to study ways to boost the state’s recovery from the COVID-19 pandemic and response, prepare for future emergencies, and build a stronger state for the long term.
The commission on Friday released its report, which includes a long list of goals covering a broad range of subjects such as improving education, diversifying the state’s economy, fighting climate change and coastal land loss, and expanding opportunities for residents and businesses.
“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,” Department of Revenue Secretary Kimberly Robinson said. “A fair and balanced tax structure can help us achieve this goal.”
A number of groups, including the Pelican Institute for Public Policy, have for years been calling for tax reform in Louisiana. Simplifying the state's tax code also has bipartisan support among many lawmakers and policy analysts. Figuring out how to get there is the hard part.
The commission recommends evaluating Louisiana’s myriad tax breaks for possible elimination, with the goal of broadening the tax base and lowering rates. Simplifying the state’s complex tax structure while modernizing and streamlining the state’s decentralized sales tax collection system could make Louisiana more competitive with other states, the commission’s report states.
The report does not recommend eliminating all of the state’s tax incentives, which critics say allow the government to pick winners and losers among different types of businesses, but it does say policy makers should make sure those programs are targeting high-paying, growing industries. The commission recommends renewing the New Market Tax Credit to leverage available capital for business investment and expanding the Angel Investor Tax Credit to provide more opportunities for businesses owned by minorities, women and veterans.
Incentives for building owners who alter properties to better prevent the spread of infectious diseases also should be considered, the commission suggests.
Other recommendations in the report include, but are not limited to, the following:
-Establish consistent pandemic reopening guidelines that are accessible and understandable, increase testing in low-income areas, and create a publicly available dashboard to track and monitor cases by industry.
-Add more training resources to maximize opportunities for employees to work from home.
-Consider eliminating the state’s corporate franchise tax.
-Develop new loan programs, gap funding and seed capital for small businesses.
-Create an Office of Social Equity within the governor’s office to expand opportunities in underserved communities.
-Create an Office of Rural Development within the state economic development department.
-Support living wages by either expanding the Earned Income Tax Credit or raising the minimum wage.
-Promote access to broadband by removing state and local obstacles to investment and developing financial incentives for providers in rural or less-profitable areas.
-Continue to boost investment in, and access to, early childhood education.
-Create pathways to education of unemployed, underemployed, and formerly incarcerated residents.
-Encourage investment in new energy technologies such as carbon capture, solar, wind and other renewable technologies.
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