The Tax Burden on Louisiana Businesses

Date: September 02, 2015

Louisiana has high corporate taxes, but makes up for it with substantial incentives programs.

With all factors taken into
consideration, Louisiana’s tax burden is among the lowest in the country,
according to a new report from the Tax Foundation.

These figures were established
by the Tax Foundation’s report Location
Matters: The State Tax Costs of Doing Business
, which evaluates the
advantages, drawbacks and overall costs of doing business in each state, as
determined by examples of the various taxes that would be required by several
types of businesses in each state.

The report explains that
Louisiana’s low tax burden is “due less to its overall tax structure than to
unusually generous incentives programs.” Compared with other states,
Louisiana’s tax rates are on the higher end, but incentives programs offset
these rates, particularly in the case of new manufacturing firms and Research
& Development facilities.

Both capital-intensive and
labor-intensive manufacturers ultimately pay tax rates of less than 0.1 percent.
And with the incentive programs taken into account, the tax rate of new R&D
firms ends up being -10.3 percent—which means those companies actually receive
a substantial tax subsidy. That gives Louisiana the No. 1 economic ranking in
the country for new R&D facilities.

Similarly, Louisiana pulls in
at No. 3 for mature R&D facilities with a tax rate of 1.8 percent, following
only Nebraska (-2.3 percent) and Hawaii (0.9 percent).

The incentive programs, which
make those rates possible, include a $100 value for each new job creation, 20
percent of in-state R&D expenses per federal concepts, and 10 years of 100
percent abatement of property taxes for manufacturing buildings and machinery.

On the other hand, new
distribution centers experience the highest tax rates of any business type in
Louisiana, with a rate of 42.4 percent. That puts Louisiana at No. 39 across
all 50 states, with Georgia pulling in at No. 1 and South Carolina at No. 50.

In general, Louisiana
possesses a corporate tax rate of 8 percent, individual income tax of 6
percent, state sales tax of 4 percent, and an average local sales tax of 4.91
percent.

Related Content: Small Business News | Louisiana

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