LAFAYETTE PARISH — As Governor Jeff Landry’s Special Session on tax reform continues, the House Ways and Means Committee voted to advance several measures in Thursday’s Special Session.
Committee members approved two major bills from Landry's tax plan: a personal income tax reform and a corporate franchise tax elimination. House Bill 1 proposes a flat 3% rate for personal income tax by compressing tax brackets and increasing the standard deduction. House Bill 3 would eliminate Louisiana’s corporate franchise tax and restrict eligibility for certain credits associated with the tax.
Governor Jeff Landry’s plan to overhaul Louisiana’s ‘broken’ tax code will have widening implications on for the residents of Louisiana. On the surface, Landry’s plan would broaden the tax code, eliminate outdated tax policies, and provide relief to Louisiana’s lower income families.
Landry’s plan, authored by State Secretary of Revenue Richard Nelson, will also help fix the state’s budget deficit which Landry says could reach nearly half a billion dollars if these reforms are not adopted.
Landry is touting his reforms as “the largest tax cut” in the state’s history, hoping to bring Louisiana’s economy in line with other states.
Sanders Colbert, Tax Attorney at Stone Pigman says Louisiana residents will feel the immediate impact, “The most direct impact on ordinary taxpayers is going to be the immediate cuts on impact taxes which would affect, virtually all taxpayers should notice that through less withholding against their paycheck,” Colbert said.
Landry is also proposing cutting the corporate income tax from 7.5% to 3.5%. The plan also calls for the elimination of the Corporate Franchise tax which he says has been a roadblock to Louisiana’s economic development.
Colbert says the proposals would help eliminate some of the taxes associated with doing business in Louisiana.
“From a competitive nature, some of these taxes the Governor is trying to eliminate are the kinds that are on the minds of businesses when it comes to investing in the State,” said Colbert.
A study by the Public Affairs Research Council found Landry's proposals would have wide reaching impact on Louisiana residents. Here's a look at some of the findings:
- The top 10% of taxpayers in the state will pay about 37% of the total sales tax increase with 63% being borne by the 90% of taxpayers with lower incomes.
- 1,078,000 households would receive a reduction of 20% or more in their combined sales and income tax liability.
- All resident households are likely to see an increase in their state sales tax liability as a result of the proposal to apply sales taxes to digital goods and other services and transactions.
- Those making $80,000 and $250,000 would still see a net reduction in income and sales taxes, but in a range from about 13% to 19%.
- Those with incomes above $200,000 would also see tax reductions of 20% or more.
23 items are being considered over the next few weeks. The session must end by November 25th.
Here's the full study:
