Louisiana businesses aren’t as abused as LABI claims

One of my favorite T-shirts in my vast collection reads “When all else fails, manipulate the data”  Once again Stephen Waguespack, president of the Louisiana Association of Business and Industry, LABI, is lamenting  the fact that businesses pay a greater percent of the taxes in Louisiana as compared to the nation as a whole.   Consequently he feels that calling for a reduction in state tax breaks for the business community is tantamount to demanding the first born of every businessman in the state.

While Louisiana does have a higher than the national average corporation tax rate, the LABI president fails to report how many businesses in the state use revenue tricks to avoid paying the high tax rates.  This problem is clearly apparent in a report released by the Louisiana Department of Revenue.  It examined 87 of the largest companies that filed corporate tax returns in 2012 and found only one-quarter (22) paid corporate income taxes in Louisiana, even though 96 percent of those that made financial reports public claimed they were profitable.  Additionally, only half of the 87 paid corporate franchise taxes in Louisiana. The report found that,  “Many companies received refunds from refundable tax credits that exceeded their income and franchise liability.” 

Another fact omitted by the LABI president is the number of ‘state tax gifts’ given to large corporations in this state.   According to the Good Jobs First and Corporate Research Project, in Washington, D.C., Louisiana has given over $13 billion of subsidies to businesses, mostly during Jindal’s reign.   Louisiana ranked the fourth highest in amounts given by a state. The report shows hundreds of millions of subsidies given to large energy companies.

Additionally, corporate taxpayers, like individuals, are permitted to deduct their federal taxes on their state tax returns under present Louisiana laws.

 Are corporate tax rates high as LABI claims? Yes indeed.  However, large businesses and corporations are well compensated for these rates and some don’t pay anywhere near the present rates.

Instead of Mr. Waguespack spending his energy defending deficit-enhancing business tax breaks and rebates presently operating in this state, his time would be better spent advocating for an over-all tax structure revision.  Such a restructuring should include reducing corporate tax rates – which currently range from 4 to 8 percent, in conjunction with making businesses pay taxes for activities that go untaxed today or generate rebates.   However, it is quite apparent that Mr Waguespack desires only the former, and not the later; which provides no financial benefit to the state.