Louisiana House passes bill to lower personal income tax, in anticipation of more sales taxes

BATON ROUGE, La. (WVUE) – Following its passage through Louisiana’s House of Representatives on Tuesday (Nov. 12), the state Senate now will take up a bill that would lower personal income tax for state residents.

While 87 lawmakers pushed the bill forward, 12 skeptics expressed a number of concerns over the legislation’s implementation.

State Rep. Julie Emerson (R-Carencro) said the ultimate goal is to eliminate personal income tax entirely, but that it must happen incrementally. Supporters believe flattening the personal income tax rate to 3% is fairer and will attract more businesses.

“When you drop bills, you expect them to be worked on, debated on, changed, modified and made better,” Gov. Jeff Landry said. “The bills that will end up on my desk, no doubt, will place Louisiana in a better position economically than we’ve been in a long, long time.”

Under Louisiana House Bill 1, if you’re paying more than 3% income tax, it will be lowered to 3%. If you’re currently paying less than 3%, you won’t have any personal income tax.

“We want everyone in Louisiana to save more money, which they are in this bill,” Emerson said.

It’s the start of a larger tax reform package proposed by Gov. Landry that Emerson said aims to modernize the state’s tax policy.

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The bill is being discussed alongside bills to lower corporate taxes and add a host of new sales taxes on various goods and services.

But some worry reducing income and corporate taxes could cost the state budget billions.

State Rep. Mandie Landry (D-New Orleans) posed the question, “Where is this hole going to be plugged from?”

Meanwhile, State Rep. Matthew Willard (D-New Orleans) asked if “we’re putting the cart before the horse by voting for the revenue decreases before we vote for the bills that would raise revenues?”

Emerson replied, “I don’t.”

While lowering personal income taxes would decrease the state’s revenue, Emerson said the proposed new sales taxes would help make up the difference.

“Income tax, obviously, punishes people for making more money. Sales tax allows people to choose where they pay their tax,” she said.

Emerson said she believes consumption-based taxes give Louisianians more control over their finances and how they choose to spend their money.

She said small businesses would also benefit. Plus, Emerson said the state would benefit from tourism sales taxes.

For example, those with a $40,000 income would go from paying $1,400 a year to $1,200. If you make $100,000 and pay $4,250, you’d end up paying $3,000.

But some remain skeptical that this proposed bill will help people save money.

“We would be raising this money, essentially, from the same people we are cutting it from,” Rep. Landry said.

Willard said, “Many of the sales and services that are currently taxed and being proposed to tax are essentials. How can we truly say we’re giving the people of Louisiana a tax break?”

Those in favor of the bill’s passage said states such as Texas, Florida and Tennessee don’t have a personal income tax, while Mississippi and Arkansas are moving in that direction. They argued many of those states are growing in population, unlike Louisiana, suggesting there must be a correlation.

“We’re losing Louisiana. I mean, we’re losing our people. We’re doing this to try and be more competitive,” Emerson said.

Gov. Landry told Fox 8, “It’s demonstrable. We’ve seen this in other states, when they move from the Bottom 10 to the Top 10, according to the Tax Foundation. It’s like a barometer. All of the sudden, the economies get kicked up and everybody makes more money.”

He said this is the largest tax cut in the history of Louisiana and said he’s pleased with how the legislative process is progressing.

“I had a great conversation with the Senate president today. We’re engaging the senators. I think the way that the process is working now is much better than what we had in the previous session,” the governor said.. “We’re all kind of learning. Kind of like a football team, playing ball for the first couple of times. We’re getting in the game, and I think that we’re going to end up with a great product for the people of the state of Louisiana.”

Emerson said that if the bill is passed and signed into law, residents would start seeing savings in their paychecks come January.

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