Now that the special session is over, attention turns to the fiscal session that begins in April. The Louisiana Budget Project has released its tax reform blueprint. Senior Policy Analyst Nick Albares says we need a tax system that is fair, adequate, competitive, timely, and sustainable. He says one way to do that is to eliminate the federal income tax deduction, which is a credit only two other states offer.
(pictured: Nick Albares and Director Jan Moller)
“Under our plan, 60% of Louisiana families would see a tax cut, while we would still raise $371 million that could be invested in critical state priorities,” Albares said.
Albares says this credit costs the state nearly $1 billion a year, while only those at the top of the income spectrum benefit from it. He says they’re calling for a reduction in the state sales tax from 5% to 4% and a broadening of the sales tax base.
“We’re calling on the base to be broadened to its current temporary base that was put in place during the last legislative session and also expanding to some services that are taxed in neighboring states,” Albares said.
Landscaping services, haircuts, internet and cable subscriptions, and security services are some things that would be newly taxed under the proposal. Albares says they also want to double the earned income tax credit, which benefits low income working families. He says lower income families currently pay taxes at twice the rate of the wealthiest families in the state.
“In a state like Louisiana, where we have the third highest poverty rate, the third highest child poverty rate, and the fourth highest rate of income inequality, it’s essential that we do more to support families struggling to make ends meet,” Albares said.
Other recommendations include limiting some tax exemptions, including the film tax credit, and eliminating excess itemized deductions.