Gov. Landry unveils his tax reform plan that he says would simplify the tax code and close most of a $700 million budget shortfall.
In a news conference at the Capitol, Landry said the main objective of his plan, which he has dubbed Driving Louisiana Forward, would lower income taxes for all Louisiana taxpayers.
“This plan will provide an immediate increase in the take-home pay of every Louisiana taxpayer,” said Landry. “We’re also protecting the working poor, the middle class and our seniors by dramatically improving the standard deduction in Louisiana to $12,500.”
Under the current system, the income tax is 1.85% for the first $12,500; 3.5% between $12,500 and $50,000; and 4.5% above $50,000.
Landry’s proposal would change that to a flat 3% tax for all income over $12,500.
Business would also get a tax break under Landry’s plan.
“We will make the partial business utility exemption permanent,” Landry said. “We will repeal the corporate franchise tax. We will drop the corporate tax rate from 7.5% to 3.5%.”
Landry says in order to compete economically with states like Texas, Florida and Tennessee, which have no state income tax, Louisiana needs to eliminate the income tax.
“I believe that if we enact this plan, we place ourselves on the road to reducing or eliminating the income tax by 2030,” said Landry, “or maybe we become income tax-free by 2033.”
To make up for that shortfall, Landry’s plan would start taxing lobbying services, eliminate other tax breaks and would impose new sales taxes on services that are currently not taxed, such as house cleaning, pet grooming and TV streaming services.
“We will expand the sales tax base to include additional items, so your taxation is driven more by what you choose to buy than rather by your labor,” Landry noted.
Other taxes would change; Landry’s plan would eliminate taxes on prescription drugs and would impose taxes on lobbying services.
Landry says one of the ultimate goals is to make Louisiana an attractive place for companies to do business in.
“The initial report from the Tax Foundation … shows that we move from the bottom ten to the top ten in tax relief and business climate,” said Landry.
Landry will call lawmakers to Baton Rouge next month for a special session to consider his tax reform plan.
Some components would require changes to the state constitution; if those are passed by the Republican supermajority, they would go to voters for an election sometime in March.
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