BATON ROUGE — A bill that would raise as much as $200 million in taxes while cutting the corporate income tax rate by 65 percent or more is gaining traction in the Capitol, including potential nods from the powerful ultra-conservative Americans for Prosperity and nonpartisan Tax Foundation.
House Bill 648 by Rep. Kenny Havard, R-Jackson, would create a flat corporate income tax of between 1 and 2 percent and eliminate all credits, exemptions and the franchise tax.
That would reduce the current highest corporate income tax rate of 8 percent, but actually generate more tax revenue because of the elimination of tax breaks.
"It's true tax reform that offers stability and predictability, which is good for both the state and for businesses," said Havard, who said he was still working on amendments to the bill to address concerns.
Havard's is the first tax increase bill to get so much as a whiff of support in the Capitol, where the Republican majority is focused on reducing spending rather than raising taxes.
Democrat Gov. John Bel Edwards' commercial activity tax died in committee this week, but his complaint that 80 percent of Louisiana's businesses pay no corporate income tax would be satisfied in Havard's bill.
Havard's tax bill has been steadily gaining traction as he hustles support from all corners.
House Speaker Taylor Barras, R-New Iberia, specifically mentioned Havard's bill in a Thursday interview, while House Democrat delegation Chairman Gene Reynolds, D-Minden, also said he believe the bill might be something his members could support.
"I know he's working on the bill; we'll see if it gets traction Monday (during a House Ways and Means Committee hearing)," said Barras, who didn't commit his support for the bill.
"I've talked to Kenny several times," Reynolds said. "First of all it's something that can pass; second it's a piece of what we need to solve the cliff puzzle."
Reynolds was referring to the projected $1.3 billion shortfall facing the state when a temporary 1-cent sales tax expires on July 1, 2018.
Scott Drenkard with the Tax Foundation called Havard's bill "an attractive piece of legislation in that it will broaden the base and lower rates. It's in line with the recommendations we've made," he said.
The Tax Foundation had panned Edwards' bill.
"It scraps the current corporate income tax structure, which is desirable," Drenkard said of Louisiana's convoluted and complicated concoction of rates, credits and exemptions. "The goal of the bill is to introduce a broad-based business tax that doesn't have pyramiding and in that regard it's successful."
And Havard may even have the normally tax-averse Americans for Prosperity on board.
"I like elements of the bill; it's broad-based and a mostly flat piece of legislation," said John Kay of Americans for Prosperity. "I think it could be good legislation that has merit. I still haven't seen a fiscal note, so it's too early to say whether or not we will come out in favor of the bill, but I'm intrigued."
Havard's effort has also been noticed in the Senate, where members there must wait to see what the House sends their way.
"I've heard (Havard's) bill is gaining momentum," said Senate President John Alario, R-Westwego.
But at least one powerful business advocate seemed poised to oppose the bill.
"Many questions are yet to be answered with this bill but one answer is clear," Louisiana Association of Business and Industry President Stephen Waguespack said. "Now we know the governor's backup tax plan."