In 2014, Louisiana Gave Away $1.7 Billion in Corporate Tax Exemptions
Louisiana is facing a budget crisis. The state needs $940 million to fix the budget deficit by June 30, 2016, and another $2 billion next year.
The Louisiana legislature is in special session this month to confront the issue.
Meanwhile, on February 19, 2016, Louisiana Legislative Auditor Darryl Purpera released this 25-page audit of tax revenues and exemptions for fiscal years 2010 to 2015 (projected). (For a one-page summary of the report, click here.)
Based on FY 2015 projections, Louisiana tax exemptions are expected to finally overtake Louisiana tax revenues (click to enlarge):
And guess which type of tax is grossly outdone by its exemptions?
Corporate Income and Franchise:
Together, the corporate income and franchise tax exemptions were almost $1.7 billion in fiscal 2014 compared to $624 million in revenue.
$1.7 billion in excusing corporations from paying taxes to a state that is facing belly-up status in its budget.
In other words, for every dollar corporations paid in taxes in FY 2014, they were excused from paying an additional two.
Corporation owes three dollars; broke Louisiana says, “We’ll take one.”
These things ought not to be.
Purpera notes and suggests the following:
…Louisiana has a large number of tax exemptions — 464 — and just 52 have sunset provisions that set a specific time for the legislation to expire unless lawmakers take action beforehand. That means the vast majority of Louisiana’s tax exemptions are essentially continuing without evaluating their value or benefit. As the Legislature continues to look for money to make up the state’s budget shortfalls, it is important for lawmakers to have a systematic and robust review process for reviewing tax exemptions.
- Matter for Legislative Consideration 1: The Legislature may wish to consider requiring that all new or modified tax exemptions contain clear performance statements that include their public purposes and expected outcomes.
- Matter for Legislative Consideration 2: The Legislature may wish to consider developing a schedule for how often reviews should be conducted or include sunset dates on all exemptions that dictate when they should be reviewed.
- Matter for Legislative Consideration 3: The Legislature may wish to consider designating who specifically will conduct reviews of tax exemptions and what criteria will be used for the reviews.
There is no reason for Louisiana to be broke. We must stop picking our own pockets to fatten corporations.