Louisiana lawmakers look to change income tax structure

Louisiana lawmakers look to change income tax structure

BATON ROUGE, LA (WAFB) - Three quarters of the biggest businesses that operate in Louisiana are not paying state income taxes, according to the state Department of Revenue.

The man who oversees tax revenue for the state wants to crack down on big businesses that he said reel in returns on their investments, but pay little to nothing in taxes.

Louisiana Revenue Secretary Tim Barfield said he came across that reality while auditing 200 of the largest sales tax accounts.

"Some of these businesses are paying very little taxes and getting big refunds and inventory taxes," Barfield said.

While privacy laws do not allow Barfield to disclose the names of those companies. He said a lot of them are not Louisiana businesses, and what they are doing is not illegal.

"I do see a lot of sophisticated tax minimization strategies, companies out there trying to minimize their taxes legitimately by using the tax laws to make sure they pay as little taxes as possible," Barfield said.

Barfield reviewed corporate taxes from 2011 and 2012. He said of the largest companies that filed tax returns, only a fourth of them paid corporate income taxes. Barfield said they do it by doing business in multiple states. That allows them to move money around to states with lower tax rates and their expenses to states with higher tax rates.

State Treasurer John Kennedy pointed to Louisiana's 462 tax exemptions, which allow a particular person or industry group to not pay the same sales tax as others. He said the loss to Louisiana is $7.7 billion.

"We're like Thelma and Louise and that car in the movie headed toward the Cliff. We're not at the cliff yet, but if we don't put the breaks on we're going to go over," Kennedy said.

Kennedy said Louisiana lawmakers and Governor Bobby Jindal should have seen the disaster coming.

"He's the captain of the ship, but bears responsibility because he did push most of these things through the legislative process. But no one put a gun to the heads of the legislators and made them vote for this," Kennedy said.

Representative Julie Stokes of Kenner, a Certified Public Accountant, is proposing five bills this legislative session she believes will help change Louisiana's tax structure.

One of Stoke's proposals calls for a "combined reporting" method which would require companies that operate in other states to add up their profits and include them in a single report.

"That would require entities doing business in Louisiana to report their income on a consolidated basis, instead of piecemealing all around the country," Stokes said.

Barfield believes lawmakers will be open to the change.

"We tried tax reform a couple of years ago, at least start the discussion. There just wasn't the appetite for it. But there's a bigger appetite today because of the budget issues," Barfield said.

Governor Jindal said in a statement, "This is a great example of why we unveiled a budget proposal that cuts over $500 million of corporate welfare and prioritizes heath care and higher education ahead of companies that have loopholes to not pay taxes."

Lawmakers head back to the Capitol for the start of legislative session on Monday.

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