House hears testimony on tax restructure as Landry seeks special session

(By Nolan Mckendry/The Center Square) − The Louisiana Legislature has been in an all-hands-on-deck scramble to address the steep fiscal cliff projected over the next three years.

The Legislature is proposing a 5% budget cut across the board, tax policy reforms and even pondering the elimination of entire agencies.

On Thursday, the House Ways and Means Committee heard testimony from various think tanks and policy experts on how to make Louisiana a more competitive state, create jobs and stop out-migration.

Louisiana is one of the few Southern states that saw outmigration, according to a report from the Tax Foundation.

“We have so many Louisiana citizens that are leaving for opportunity in other places,” said former Rep. Scott Simon, R-Abita Springs. “Louisiana is not ranked too bad in the tax burden we pay. It’s just a convoluted system that makes us uncompetitive.”

Recent testimony at committee hearings have echoed many of the same sentiments and policy proposals. The secretary of the Louisiana Department of Revenue, Richard Nelson, emphasized a need to simplify and streamline Louisiana’s tax policy, which can be particularly burdensome for businesses.

“When companies are looking to relocate, this is the reason they skip over Louisiana,” Nelson said in previous testimony. “If you go to the Tax Foundation website, they’ll say, ‘hey, you know, Louisiana has this weird credit, but you probably can’t figure it out, so we just say they have an inventory tax anyway.'”

Much of the testimony on Thursday, specifically from the Tax Foundation and the American Legislative Exchange Council testified to reforms which target income taxes for individuals and businesses alike.

“Louisiana is in a very competitive region. You’ve had to deal with the competition with Texas being a zero personal income tax state. You’ve seen that with Tennessee, another no-personal-income-tax state,” said Jonathan Williams, ALEC’s chief economist and executive vice president of policy, mentioning that predictability is crucial for business and individuals.

“One of the big takeaways from the tax cut revolution has been states moving away from a graduated personal income tax…to a flat tax.”

According to Williams, Texas and Florida — both of which have no personal income tax — saw a net increase of 200,000 taxpayers. North Carolina, whose business income tax will hit zero by the end of the decade, saw an increase of 100,000 in the last 12 months.

“In the last 12 months alone, nearly 30,000 residents have left Louisiana,” Williams said.

The Tax Foundation and ALEC were not without pushback from some critics, including Jan Moller, the executive director of Invest in Louisiana.

“I don’t know anyone who looks at the Tax Foundation rankings before they decide where they’re going to move their family,” Moller said. “I think people do look at the quality of schools, the quality of infrastructure and the safety of a particular community.”

On Tuesday, Gov. Jeff Landry called a special session aimed at eliminating state income to overhaul the tax system that is scheduled for November. An executive order calling lawmakers back to Baton Rouge has yet to be released.

“I hate the income tax … a man and woman’s labor should never be owned by the government,” Landry said.

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