Reforming tax code in La. would provide long-term business benefits, economist says
Comprehensive, statewide tax reform would improve the state’s business climate and, long-term, its economy. But residents of Louisiana would likely not feel the benefits of such reform any time soon, LSU economist Jim Richardson told members of the Louisiana Committee of 100 for Economic Development, a group of top business leaders from around the state, who gathered in Baton Rouge today for their annual conference.
“Tax reform is part of a system and it helps create stability, which is important,” Richardson said, in response to a question from New Orleans developer Pres Kabacoff about the economic benefits of fiscal reform. “But it isn’t a one-year payback. It’s a 25- or 30-year payback, and that makes the sell job very hard.”
Richardson, who recently completed a study with economists from Tulane University about ways to improve the state’s tax code, says making changes such as lowering the personal and corporate income tax rate, doing away with certain exemptions and phasing out the inventory tax on businesses would make the state’s tax climate more attractive to outside investors. It would also make it more fair and easier to navigate.
“But does that mean businesses are going to be knocking down the door to come here next year?” he said. “It would be misleading to suggest that.”
For Richardson, the speech was an exercise in preaching to the choir. Members of C100 as a whole support tax reform on principle. In fact, the group is financing a study by the Washington, D.C.-based Tax Foundation that will build on the findings and recommendations in the latest Richardson report to create for Louisiana a long-term blueprint for tax reform.
“What Dr. Richardson did was focus on this legislative session and the near term,” says Michael Olivier, CEO of C100. “What the Tax Foundation is studying for us is what we have to do in the next administration and beyond.”
Tax Foundation economist Scott Drenkard also addressed the group today pointing out that while Louisiana’s business tax burden is generally among the lowest in the nation—47th out of 50—the state ranks poorly compared to other states with respect to its tax climate, 35th out of 50. That’s because Louisiana’s tax code is riddled with loopholes, exemptions and a high sales tax.
Earlier at the conference, C100 members heard from State Superintendent of Education John White and BESE President Chas Roemer about the need to keep in place the state’s controversial Common Core educational standards. The group also met individually behind closed doors with each of the four gubernatorial candidates.