The Senate gave final legislative passage Thursday to a package of tax reform bills that supporters say is a revenue-neutral simplification of the state personal income and business tax code.
Pelican Institute CEO Daniel Erspamer has long supported the changes. The business and personal “tax swap” package, if approved, will cut income tax rates in exchange for eliminating the ability to deduct federal taxes from your state tax liability. Erspamer touted the changes saying not only would they lower tax rates, but they would “disentangle” state government revenue from ever-changing federal tax policy.
“We will have a more predictable, and stable tax structure here in Louisiana,” said Erspamer.
The package also phases out the franchise tax for many smaller businesses and lowers the franchise tax rate over time for larger companies. Voters will have to approve the personal income tax reform proposal at the ballot in the fall. The other changes will require Governor Edwards’ signature.
Erspamer notes that for most residents and businesses this isn’t exactly a net tax cut.
“In the short term, in the near term, it is absolutely revenue neutral for the state, and it should be neutral on average for every taxpayer in the state,” said Erspamer who added “It makes Louisiana more competitive. We will have the lowest personal income tax rate of any state in South that taxes income and the fourth lowest income tax rate in the country.”
Opponents argue the reforms mostly benefit the state’s wealthiest individuals and corporations.
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