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Louisiana Tax Study

Economist Team Proposes Tax Reform for Louisiana

Download the Executive Summary of the Presentation [pdf]

Download the Presentation [pdf]

Download "Study Calls for Single Sales Factor And Combined Reporting" by Eric Yauch in State Tax Notes by Tax Analysts [pdf]

The Speaker of the House commissioned a comprehensive analysis of the existing tax structure that was put in place in 1973, and Steven M. Sheffrin and Jim Alm of the Department of Economics at Tulane University and Louisiana State University economist Jim Richardson have been studying Louisiana’s tax structure since, with the help of graduate and undergraduate students at Tulane University and Louisiana State University and with support from the Murphy Institute at Tulane University.

The team of economists met with Louisiana legislators on Tuesday, March 10, 2015, to discuss proposed changes to the tax structure in the state of Louisiana.

Summary of the Recommendations:

  • Lowering personal income tax from 2/4/6 percent brackets to 1/3/5 percent brackets and making other changes, such as eliminating excess itemized deductions (itemized deductions on a federal return that exceed the standard deduction) and not allowing residents to deduct federal taxes paid on their state returns
  • Lowering the corporate tax rate from 8 percent to 5 percent, which could be approximately revenue neutral by eliminating federal deductibility and making other changes to expand the tax base
  • Expanding the sales tax base by taxing personal services
  • Moving to a unified state and local sales tax base and single-entity collection and auditing of state and local sales taxes, and eventually tapping into tax revenue from Internet sales
  • Raising taxes on tobacco, alcohol and fuel to bring rates in line with other state
  • Immediately reducing and eventually phasing out taxes on business inventory (businesses currently receive credit on their state returns for local taxes they pay on inventory)
  • Reducing the industrial tax exemption from 100 percent to 80 percent of the value of a property and the term of the exemption from 10 years to seven, which could offset at least some of the burden from eliminating inventory tax
  • Capping or eliminating tax credit programs for film/TV production and solar power

For a complete list of recommendations, please refer to the Executive Summary or the Presentation.

In addition, the team met with the members of the Louisiana House of Representatives on Wednesday, January 13, 2016, to present the findings of the revenue study.

Video of Testimony on March 10, 2015
Video of Testimony at the House of Representatives Organizational Session on January 13, 2016

Press Coverage:
“Economists tell Louisiana Legislators to raise cigarette tax, cut inventory tax” by Mark Ballard, The Advocate
“Tax System Study Not Miracle Cure” by Sue Lincoln, KEDM 90.3
“ ‘Broken’ state tax system examined” by Jeff Matthews, Gannett Louisiana
“Film industry tax-credit study reports many benefits for Louisiana; critics not convinced credits are worth the cost” by Tyler Bridges, The Advocate

Blog Discussion:
“Louisiana Tax Reform: Some Smart Guys Worth Listening To” by David Brunori, Tax Analysts

Download the Executive Summary of the Presentation [pdf]

Download the Presentation [pdf]

Download "Study Calls for Single Sales Factor And Combined Reporting" by Eric Yauch in State Tax Notes by Tax Analysts [pdf]