House passes legislation to cut corporate franchise tax

Louisiana will lose hundreds of millions in revenue

By: - June 5, 2023 6:59 pm
The Louisiana State Capitol

Wesley Muller/Louisiana Illuminator

Louisiana House lawmakers passed legislation Monday that would phase out the state’s corporate franchise tax revenue and partially offset the loss in state revenue by cutting a lucrative tax credit program.

Two proposals from Sen. Bret Allain, R-Franklin, which include Senate Bill 1 and Senate Bill 6 tied together as a tax-swap package, both passed the House unanimously. 

The initial version of Senate Bill 1 would have repealed the corporate franchise tax, which is essentially a privilege tax corporations pay in order to do business in the state. It is levied at a rate based on the value of a company’s stock. A full outright repeal would have decreased Louisiana’s revenues by approximately $1.033 billion over a five-year period. 

Allain amended the bill to gradually reduce the franchise tax rather than outright appeal it. It provides for a 25% rate reduction each year combined corporation income and franchise tax collections exceed $600 million with the excess deposited into the state’s Revenue Stabilization Trust fund.

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The bill’s latest fiscal note estimates a reduction of $631 million in franchise tax revenue over five years, though Senate Bill 6 offsets a significant chunk of that loss by slashing the Quality Jobs tax credit program. 

The Quality Jobs program, administered through Louisiana Economic Development (LED), offers payroll tax rebates to certain businesses for creating or retaining jobs — an incentive program that costs the state millions every year with a questionable return on investment.

Senate Bill 6 would reduce Quality Jobs tax credits 50% of their current value in any year the franchise tax is reduced. 

Combined, the legislation’s net impact on state revenues would be a $163 million loss over five years, according to the fiscal note

The package will return to the Senate before heading to Gov. John Bel Edwards for approval.


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Wesley Muller
Wesley Muller

Wes Muller traces his journalism roots to 1997 when, at age 13, he built a hyper-local news website for his New Orleans neighborhood. Since then, he has freelanced for the Times-Picayune and worked on staff at WAFB/CBS, the Sun Herald and the Enterprise-Journal, winning awards from the SPJ, Associated Press, Mississippi Press Association and McClatchy. He also taught English as an adjunct instructor at Baton Rouge Community College. Muller is a New Orleans native, Jesuit High School alumnus, University of New Orleans alumnus and a U.S. Army veteran and former paratrooper. He lives in Southeast Louisiana with his two sons and wife.