The 2021 Regular Session convened last week with an action-packed schedule focused on legislative leadership’s top policy priority this year – tax reform. The House Ways and Means and Senate Revenue and Fiscal Affairs committees dove right into debate on measures spanning individual and corporate income tax, the franchise tax, centralized sales tax collection, and more.
Here is some of the priority legislation 1A is engaged on and monitoring:
Centralized Sales Tax Collection
HB 199 by Speaker Clay Schexnayder – This Constitutional Amendment establishes the State and Local Streamlined Sales and Use Tax Commission to modernize and simplify our tax system for Louisiana’s small businesses. This new 8-member Commission will have equal representation from state and local governments and will administer sales tax collection, auditing, and dispute resolution. This common-sense reform puts Louisiana’s businesses on a level playing field with online retailers like Amazon and Wayfair. The House Ways and Means Committee reported HB 199 favorably by a vote of 14-1, and the bill now heads to the House Committee on Civil Law and Procedure.
Individual and Corporate Income Tax / Franchise Tax
SB 159 by Sen. Bret Allain – This Constitutional Amendment reduces the maximum rate of individual income tax from 6% to 5% and allows for, but does not require, a federal income tax deduction. The bill was reported favorably by the Senate Revenue and Fiscal Affairs Committee and is scheduled for Senate consideration on 4/19.
HB 292 and HB 293 by Rep. Neil Riser – These bills reduce the corporate income tax rate from a graduated schedule of rates to a flat rate of 6% and eliminate the federal income tax deduction to offset the cost of the rate decrease. Both measures were reported favorably by the House Ways and Means Committee and now await consideration by the full House.
HB 279 by Rep. Phillip DeVillier – This legislation phases out the corporation franchise tax by January 1, 2027. Eliminating the franchise tax will encourage business investment and make Louisiana more competitive with other states. Rep. DeVillier voluntarily deferred HB 279 until fiscal notes are produced for related tax legislation.
Additional Tax Reform
SB 157 by Sen. Bret Allain – This measure exempts nonresident mobile workers who work in the state for fewer than 30 days from individual income tax and their employers from withholding tax. This change was recommended by both the Multistate Tax Commission (MTC) and the Council on State Taxation (COST). The bill was reported favorably by the Senate Revenue and Fiscal Affairs Committee and is scheduled for Senate consideration on 4/19.
SB 160 by Sen. Bret Allain – This good-government bill simplifies tax administration for businesses by aligning state partnership reporting adjustments to federal taxable income with current federal partnership audit adjustments. The bill was reported favorably by the Senate Revenue and Fiscal Affairs Committee and is scheduled for Senate consideration on 4/19.
Economic Development Toolkit
1A is monitoring several measures that would endanger Louisiana’s economic development toolkit. We have learned these bills are intended to serve as a jumping-off point in the larger tax reform debate. Economic development stakeholders are working with the authors to amend the bills before they move forward in the legislative process. 1A will closely monitor amendments to these bills and engage accordingly.
Be on the lookout for future 1A legislative updates as the Session progresses.