Moret touts tax simplification, new exemption

Published Oct 1, 2012 at 10:00 am (Updated Oct 1, 2012)

Moments after explaining the Jindal administration's desire to add another exemption to the Louisiana tax code, LED Secretary Stephen Moret on Friday said Jindal wants to simplify the state's tax code.

During the last session, four incentive programs were adopted, one of which requires voter approval of a constitutional amendment on Nov. 6. If approved statewide, local governments could opt into a property tax exemption, similar to the existing industrial exemption, for corporate headquarters, distribution facilities, data service facilities, R&D operations, and digital media and software development centers. Other states already offer property tax offsets for those sorts of projects, Moret says.

Unlike the existing exemption program for manufacturers, the first $10 million or 10% of market value, whichever is greater, would not be exempted. At least a $25 million capital investment and at least 50 new direct permanent jobs would be required, and a majority of sales and/or customers would have to originate outside the state. The incentive would only be offered in parishes where the parish governing authority, all municipalities and school boards that levy property taxes, the parish law enforcement district, and the assessor all opt in.

“This is a very narrowly drawn property tax exemption,” Moret says, noting that he expects little opposition. “It will be at most four or five projects a year.”

At the same time, Moret says simplifying the state's tax code and lowering marginal rates could help attract high-income individuals and companies that don't realize that Louisiana's tax burden actually is relatively low.

“People perceive Texas [for example] to be a lower-tax state,” he says. “It is lower tax if you're a high-income individual, for sure. Unfortunately, those individuals, corporate executives and successful entrepreneurs, they get to decide where they place their businesses.”

Texas also has a reputation as a low-tax state for business because they don't have a corporate income tax. In many cases, Louisiana's exemptions keep costs low, but business leaders evaluating dozens of locations for a new facility don't always get into that level of detail.

“In reality, if we get to the finish line, and a company actually runs the numbers,” Moret says, for many industries, “we will be one of the lowest tax states in the country.”

The influential Tax Foundation ranks Louisiana's 2012 business tax climate No. 32 in the country because the state's system is so complex, he says. The Legislature started the tax reform conversation this year with a review of the state's hundreds of credits, rebates and exemptions, although some legislators say the point of the exercise is to raise more revenue; Jindal wants the results to be revenue neutral. Jindal has not announced which exemptions his administration might be willing to sacrifice in the name of creating flatter, lower rates.

“We're looking at a range of options,” Moret says.