NEW ORLEANS (WVUE) – A seasoned accountant and the chairman of a budget watcher says the so-called * tax swaps * proposals voters will ponder this fall won’t result in a big drop in most people’s state income tax bill.
Before the end of the regular 2021 legislature, state lawmakers finalized an income tax reform package on Thursday, and voters will be able to decide on the part of the constitutional amendment.
The law lowers tax rates for individuals and the constitutional amendment that will appear on the October vote would put a cap on the income tax rate in the constitution.
In turn, the state income tax deductions that individuals and married couples receive for federal income taxes paid would be abolished.
Richard Tullier is CPA at Wegmann Dazet & Company.
“What it will do for most people, they may see a small decrease in their tax bill, it won’t be dramatic, but it will be a decrease in their tax bill. The people who will be hardest hit will be people who have high federal tax burdens, ”Tullier said.
Jan Moller is the executive director of the Louisiana Budget Project. He has concerns about the proposed tax law changes.
“Most citizens won’t see any significant changes in their state income statement, and frankly that’s one of the two reasons we had a problem that it doesn’t address the fundamental problem with our tax structure in Louisiana.” Low-income state and local taxes are paid at a higher rate than people at the top of the income scale, and that’s because Louisiana has extremely high sales taxes, which hits low- and middle-income families hardest, and we’re comparatively low at state income taxes, ”said Möller.
On the last day of the legislature before the vote on the income reform laws, Senator Bret Allain, R-Franklin, discussed how tax rates would change.
“The new rates will be 1.85% for the lowest category, versus 2%; 3.5 for the middle class, from 4 downwards and 4.25 for the upper class from 6% downwards, ”Allain told his colleagues.
And the proposed constitutional amendment would limit the income tax rate to 4.75%.
“A cap of 4.75 is great, unless it allows you to take more prints off you could be back where you started,” said Tullier. “For people who, you know, two spouses have jobs that make maybe between $ 60,000 and $ 100,000 a year, they won’t see much of a difference because the income from that federal income tax deduction is tax-offset.” Price change and that is their goal.
Moller and Tullier agree that Louisiana is an outlier in terms of state income tax deduction on the state’s tax form.
“Absolutely, we’re an outlier at this, and federal income tax deduction is bad tax policy, and that’s something people across the political spectrum agree on,” Moller said.
“Most states don’t have federal income tax deductions because they start with regular income and you recognize your income just like you would on a federal return. Louisiana is one of the outliers that still relies on starting with the state, what’s called the adjusted gross income level, rather than just traditional gross income. So this will bring Louisiana in line with other states, ”said Tullier.
Möller is also concerned that some parts of the tax reform package would trigger tax cuts that would affect education and other government spending.
“They added what we call trigger language, which says that if these laws are passed and put to the vote in October and tax revenues are better than expected, it would automatically trigger additional income tax cuts in the coming years to the top Priority list to come rather than priorities like teacher salaries, early childhood education, higher education, health care, all the other things our politicians are prioritizing would be behind additional tax cuts that trigger language, “he said.
Do you see a spelling or grammatical error in our story? Click here to report it. Please add the heading.
Copyright 2021 WVUE. All rights reserved.