The state Legislature in Louisiana has approved legislation that will significantly impact the state’s tax system. Income taxes will decrease, sales taxes will rise, and a corporate asset tax will be removed. Governor Jeff Landry hailed this as a political victory, although lawmakers made changes to the original package to accommodate special interests.
A major change involves eliminating the graduated individual income tax system and replacing it with a single 3% rate. However, to compensate for tax cuts, the state sales tax will increase to 5%. This tax increase will last for five years and then drop to 4.75%. Louisiana already has the highest sales tax rate in the country.
The legislation also includes the abolition of the .275% corporate franchise tax and a reduction of the top corporate income tax rate. Landry’s overall plan aims to reduce state tax collections and provide the most significant savings to the wealthy and corporations. The package passed through both the House and Senate despite some opposition.
The legislation will also undergo a rewrite of the state tax code, which will be subject to voter approval in March. The proposed changes include a pay raise for teachers, property tax reforms, and other tax modifications. Local governments emerged as winners in the aftermath of the special session, fending off certain tax changes that would have impacted their revenue streams. Despite some criticisms and challenges during the process, the tax overhaul legislation marks a significant political achievement for Governor Landry and the state of Louisiana.
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Photo credit www.nola.com
