FRANKLIN — State Sen. Bret Allain said he will pitch the most ambitious tax plan ever to the legislature when they meet on April 12, which includes reducing personal state income tax.
Allain outlined a six point plan before the St. Mary Parish Chamber of Commerce, on Wednesday.
“People are leaving New York, California, and other North East states, but they’re not coming here because of our antiquated tax structure. We’re rated 44th in the nation because of these outdated laws, and the time is now for change,” Allain said.
“Louisiana is ranked near the bottom by many tax policy think tanks. Businesses pay attention to these rankings and often our state is not even considered in business location decisions because of the perception that doing business in Louisiana is too complicated and too costly. We can change this perception by simplifying our tax code.”
The 2021 Louisiana Legislative session begins in eight days. Allain is chairman of the Revenue and Fiscal Affairs Committee, which controls all tax policies as well as capital outlay allocations.
He wants to lower individual and corporate income tax rates and eliminate the deduction for federal income taxes; reduce and simplify the corporate franchise tax; phase out the local property tax on inventory; simplify the state tax administration; simplify and modernize the severance tax system; and support the ongoing effort to centralize state and local sales tax collection.
The St. Mary Parish Senator from Adeline also wants to purpose an involuntary tax on all internet purchases.
“Let’s face it, the more tax revenue we collect from Amazon, the less of a tax burden we have here. It’s unfair for our locally owned small businesses to have to pay taxes from purchases of their goods, and the big internet guns not being forced to collect anything,” he said.
Allain said two years ago Mississippi adopted a proposal to collect taxes from all internet purchases, and their income went from $5 million to $400 million inside of two years.
“We have to get on this bandwagon. It’s way overdue.”
“We also have to reduce personal income tax. And we have to do away with the federal income tax deduction (there are only two states doing this — Alabama, and us,” Allain said.
“And we have to do the same thing with corporate income tax.”
Allain said the franchise tax in its current form is considered the single most harmful tax in Louisiana because it discourages capital investment in the state.
He said only 16 states have a similar tax and four of these states are phasing out the tax.
His proposal is to phase out the tax in two parts — one, to extend or make permanent the exemption from franchise tax for the first $300,000 of taxable capital; and two, further reduce the cap, or eliminate the tax.
The senator said the franchise tax is another detrimental tax. He said Louisiana lures new industry, but then turns around and taxes the new industry’s capital.
“I can’t think of any practice that is more detrimental then this.”
Allain would also like to continue efforts to simplify the state tax administration.
“We need to reduce the administrative burden on mobile workers and their employers, and to conform state partnership audit provisions to the new federal guidelines.”
Allain said in short, he believes if the legislature can tackle most of these goals, the U.S. Tax Administration will raise the state’s ranking from being 44th to somewhere in the 20s.
“This is game changing for us,” he said.
In another matter, he said this year, the state will receive $5.4 billion from the American Relief Act from the Biden Administration.
“Wow, if we can get the tax code reformed, and spend this money wisely, specifically infrastructure, this will be a once in a lifetime chance where we can really make some change for the good, and get things right in our state.”
However, he said the tax reforms will require a two-thirds majority vote in both houses, and well as a positive vote from the public .
“I’m counting on support statewide to get us moving in the right direction,” Allain said. “We’ve got to make doing business in our state simple and predictable, in order to grow.”