Almost no one likes Louisiana’s tax system. Business advocates say it’s too complicated to navigate, and gaze longingly at states that don’t tax income at all. Progressives say the heavy reliance on sales taxes places an undue burden on lower-income workers. Good-government types from across the political spectrum dislike the myriad exemptions that pick winners and losers and make state government revenue harder to predict.
Next month, voters will have a chance to make major changes to how the state taxes us, and how those taxes are collected. Supporters of the tax-focused constitutional amendments that will be on the Nov. 13 ballot say passage would help Louisiana compete for residents and business investment with states like Texas, Tennessee and Florida. The election, originally set for Oct. 9, was pushed back one month due to the impact of Hurricane Ida.
So what’s on the ballot? When it comes to taxes, there are two amendments to watch.
Amendment 2 would cap the top rate at 4.75% for individual income tax, compared to the current 6%. If voters approve it, a separate law would go into effect that would set state income tax rates at 1.85% for the first $12,500, 3.5% on the next $37,500 and 4.25% on net income in excess of $50,000. Current rates are 2%, 4% and 6% respectively.
In exchange, taxpayers would sacrifice constitutional protection for the ability to deduct the cost of their federal income taxes from their state taxes.
Businesses are being offered a similar deal with their income taxes. The five corporate tax brackets would be collapsed into three, with the top rate reduced from 8% to 7.5% for income over $150,000.
Amendment 1 calls for Louisiana to join nearly every other state and create a single statewide entity to oversee sales tax collection.
Read the full story from the latest edition of Business Report, for a thorough explanation of the amendments.