Louisiana voters will vote on October 9th to decide whether to change the state’s income tax structure.
Governor John Bel Edwards signed a bill to trigger the fall elections through a constitutional amendment to revise tariffs and deductions.
The amendment, drafted by two legislative amendments passed by the Louisiana Legislature and also signed by Edwards, would lower income and corporate tax rates in exchange for the loss of current deductions for federal income taxes paid.
Republican Senator Bret Allain von Franklin and Republican MP Stuart Bishop von Lafayette both led the effort as chairmen of tax committees in the Senate and House of Representatives.
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Louisiana currently allows taxpayers to deduct the federal income taxes they pay from the calculation of their state income taxes. As federal income taxes rise, the state levies fewer state taxes. When federal income taxes go down, state tax revenues go up.
Louisiana’s income tax revenue is thus exposed to federal tax law and contributes to a complicated tax structure that economists and government groups such as the Public Affairs Research Council have criticized for decades.
“(The package begins) the process of simplifying our overly complex and onerous tax law that has shifted jobs and opportunities to other states and has harmed Louisiana’s families for far too long,” said the Pelican Institute, a conservative public policy think tank.
But the left-wing Louisiana Budget Project was less enthusiastic. “This means that tax cuts are at the forefront,” said Jan Moller during the debate.
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The package would also remove franchise tax for small businesses and lower the tax rate for others.
If voters gave up their tax break for federal income taxes paid, state income tax rates would go from 2% to 1.85% for the first $ 12,500 of income, from 4% to 3.5% for the next $ 37,000, and from $ 6,000 % reduced to 4.25%. for $ 50,000 and more.
Companies pay 3.5% on the first $ 50,000, 5.5% on income over $ 50,000 and up to $ 150,000, and 7.5% on income over $ 150,000. Current rates range from 4% to 8%.
The complicated swap would be largely revenue-neutral for the state, which Edwards says is necessary to support the package.
The Associated Press contributed to this report.
Greg Hilburn reports on government policy for the USA TODAY Network of Louisiana. Follow him on Twitter @ GregHilburn1.