The Louisiana House voted 60-38 on Thursday to change the way multistate corporations calculate their corporate income tax.
The Manship News Service reports that House Bill 20 also passed with an amendment that allows the biggest oil companies in the state to use a different method to calculate their tax than other companies.
Rep. Gene Reynolds, D-Minden, authored the bill.
Due to its complex nature, Reynolds gave a “layman’s explanation” of the corporate income tax apportionment, by explaining that it was a method by which companies doing business in multiple states determine how much in taxes is owed to the Louisiana Department of Revenue.
Kevin Richard, deputy secretary for the Louisiana Department of Revenue, previously said states traditionally have relied on three factors to determine how much companies owe in a particular state—how much property they own, the amount of in-states sales and the size of their payroll in a state.
Currently, Louisiana allows manufacturing and retail businesses to use a different method than other businesses to calculate how much they owe in taxes in Louisiana.
Reynolds’ bill would have made every business in the state use a single sales apportionment method. In Wednesday’s House Ways and Means meeting, Department of Revenue Secretary Kimberly Robinson said that means only a company’s sales in the state will count toward its tax liability.
Reynolds said the bill does create “winners and losers,” but that about 60% of companies will be largely unaffected by the bill. He estimated that around 20% would have a larger tax liability and approximately 20% a smaller liability under the measure.
A portion of the 20% of companies that would be hurt by the bill are so-called “integrated” oil companies—companies involved in every step of oil and gas from extraction to final sale.
Rep. Jim Morris, R-Oil City, offered the amendment, but he could not explain what the amendment did or how much it would change the fiscal impact of the bill. He said all he knew about it was that it helped oil and gas companies.
