Louisiana has achieved a top 10 ranking for having the second lowest state and local business taxes nationwide, a feat that Louisiana Economic Development officials are touting as another signal that “Louisiana’s business tax competitiveness has improved significantly over the past few years.”
According to a release from Louisiana Economic Development, “Location Matters: A Comparative Analysis of State Tax Costs on Business” takes a look at tax burdens on businesses in all 50 states, ranking No. 2 in the lowest tax burdens on new companies and No. 10 for “mature” firms.
“State-and-local business tax burdens have a significant impact on where companies choose to locate new business investment and jobs within the United States. A more competitive business tax environment helps our existing businesses to retain jobs and create new jobs in our state.” Louisiana Economic Development Secretary Stephen Moret says in the release:
Louisiana is one of only two states in the South, along with Georgia, to rank among the Top 10 states in overall tax competitiveness for both mature firms and new firms. The four other states that achieved Top 10 status in both categories are from the Midwest or West (Ohio, Nebraska, Wyoming, Utah). Considering only Southern states, the Tax Foundation study ranks Louisiana No. 1 for new firms and No. 3 for mature firms.
Since 2008 the state accelerated the elimination of its sales taxes on manufacturing machinery and equipment and elimination of business debt as a basis for corporate franchise taxes; eliminated the sales tax on business utilities and natural gas; substantially enhanced Louisiana’s research-and-development tax credit; extended the Quality Jobs incentive; and maintained the Industrial Tax Exemption Program. The state also offers one of the lowest unemployment insurance tax burdens in the U.S.
In 2002, the Public Affairs Research Council of Louisiana (PAR) published Corporate Tax Burdens in the Southern States: A Comparison, a study utilizing a similar methodology as that of the Tax Foundation but focusing only on 12 Southern states. The PAR study indicated Louisiana’s average rank in its study was No. 10 for mature firms analyzed in the 12-state pool. Accordingly, Louisiana’s business tax competitiveness has improved significantly since 2002 based on the results of the new Tax Foundation analysis.
To rank the 50 states, the Tax Foundation and KPMG analyzed state/local tax burdens for seven firm types, including a corporate headquarters, research-and-development facility, retail operation, call center, distribution facility, capital-intensive manufacturer and labor-intensive manufacturer. Financial data, tax rates, exemptions and incentives for the 50 states were then applied to both startup/new operations and pre-existing (mature) businesses (i.e., those in operation 10 years or more). The PAR study in 2002 utilized a largely similar approach.
Read the full release from Louisiana Economic Development here.