A tax package proposed by Gov. John Bel Edwards would raise taxes on the wealthy while giving 95 percent of Louisiana families a tax cut, according to a study released Wednesday.
The largest effective tax cut under the governor’s plan would go to the middle 20 percent of taxpayers – households that earn between $36,000 and $56,000 per year – while only families earning at least $203,000 per year would pay more, according to the Louisiana Budget Project, a left-of-center, Baton Rouge-based nonprofit.
Gov. John Bel Edwards is tinkering with his proposal to the Legislature to have the state be…
"Louisiana’s current tax structure is not sufficient to fund the state’s basic needs, let alone make necessary investments in education, public health and other critical priorities," the group said in a statement. “It also is fundamentally unfair, as it requires low and moderate-income households to pay a higher effective tax rate than the very wealthiest.”
The group also found that Edwards' plan would raise an additional $411 million per year, nearly enough to meet what his administration says would be a revenue shortfall next year. The extra revenue may cheer the budget project but it will likely prompt deep concern among conservatives, particularly in the state House, which is perhaps why the Edwards administration has yet to release its own analysis on whether the plan would raise more money.
Along with raising $411 million in new money, the Edwards plan would solve the "fiscal cliff" that lawmakers are facing next year when $1.3 billion in taxes will fall off.
Edwards is proposing to cut tax rates in conjunction with eliminating expensive tax breaks, along with creating a new tax on business, called the commercial activities tax. Revenue from the commercial activities tax would replace the revenue the state would lose by allowing the expiration of a 1-cent increase in the state sales tax.
Many of the governor’s ideas – but not the commercial activities tax – were among the recommendations issued by a blue-ribbon task force in January that studied the tax system last year.
Lawmakers on the House tax committee quickly launched their work Tuesday on the main debate …
Parts of his package require a supermajority two-thirds vote in the Legislature.
The governor’s proposals to lower corporate and individual income taxes coupled with ending a major tax break for corporations and individuals also would require voter approval. Voters rejected the corporate income tax swap in November.
As the budget project’s report notes, getting legislative and voter approval to change the corporate and individual income tax system is key to making Louisiana’s tax system more progressive.
The governor’s commercial activities tax would hit the poor harder, the group found.
Louisiana’s tax system currently is regressive, meaning that the poor pay a higher percentage of their income in taxes than the wealthy, according to the Institute on Taxation and Economic Policy, a Washington, D.C.-based group that works with the Louisiana Budget Project. Families that earned $17,000 or less in 2015 paid 10 percent of their income, the group found, while families that earned at least $470,000 paid only 4.2 percent.
The Louisiana Budget Project released the report two days after the Legislature began its 60-day session and at a time that the House Ways and Means Committee has begun considering dozens of tax bills, the first step in the legislative process for tax measures that would raise revenue or eliminate exemptions.
The committee ended its work Wednesday afternoon after taking testimony - but no votes - on a variety of tax bills and will resume on Tuesday. It's not clear when the committee will begin taking votes.