Businesses in Louisiana pay widely different effective tax rates depending on which industry theyÃ¢â‚¬â„¢re in and how long theyÃ¢â‚¬â„¢ve been operating in the state, according to a new report from the Tax Foundation in collaboration with KPMG.
Ã¢â‚¬Å“LouisianaÃ¢â‚¬â„¢s tax structure is characterized by high rates and partially offsetting incentives, particularly for new, but in some cases also for mature, firms,Ã¢â‚¬Â reads the report.
The study accounts for all business taxes: corporate income taxes, property taxes, sales taxes, unemployment insurance taxes, capital stock taxes, inventory taxes, and gross receipts taxes. Additionally, each firm was modeled twice in each state: once as a new firm eligible for tax incentives and once as a mature firm not eligible for such incentives.
Ã¢â‚¬Å“Louisiana offers the lowest overall tax burden in the country to three new operations, due less to its overall tax structure than to unusually generous incentives programs,Ã¢â‚¬Â the report says. Ã¢â‚¬Å“New capital- and labor-intensive manufacturing firms experience effective tax rates at or under 0.1% due to some of the most generous property tax incentives and withholding tax incentives in the nation.Ã¢â‚¬Â
Louisiana is also tied with Utah for the second-most generous research and development tax credit, reducing the effective tax rate for the new R&D center to -10.3%, meaning that such businesses actually receive a substantial tax subsidy, the report notes. Mature R&D operations enjoy an effective tax rate of 1.8%, which is 85% below the median rate nationally.
Ã¢â‚¬Å“At the other end of the spectrum, the mature distribution center is saddled with an effective tax rate of 42.4%,Ã¢â‚¬Â the report says. Ã¢â‚¬Å“The mature capital-intensive manufacturing operationÃ¢â‚¬â„¢s tax burden is 85 times that of its new counterpart.Ã¢â‚¬Â
Louisiana received the following rankings in the report for each business category analyzed:
- 3rd lowest rate on research and development facilities, at 1.8%
- 9th lowest rate on labor-intensive manufacturers, at 6.3%
- 16th lowest rate on capital-intensive manufacturers, at 8.5%
- 25th lowest rate on independent retail stores, at 15.4%
- 26th lowest rate on call centers, at 19.6%
- 27th lowest rate on corporate headquarters, at 13.7%
- 34th lowest rate on distribution centers, at 31.6%