Governor Jeff Landry's proposal to set Louisiana's income tax at a flat three-percent rate is one step closer to becoming reality. The Louisiana House of Representatives approved the measure on Tuesday, sending it to the Senate for consideration.
But who will pay for the decrease in revenue? One analyst says Louisiana taxpayers will be on the hook.
"It's kind of like a tax swap--if you want to call it that, although it's not exactly an even one," Barry Erwin, president and CEO of the Council for a Better Louisiana said.
According to Erwin, if the flat tax bill becomes law, you'll pay significantly less each year when you file your state income taxes. However, Erwin says that tax break comes with a catch.
"But the flip side of that is to pay for it or, at least, to pay for a big chunk of that, they're going to see a big increase in sales taxes, particularly on things that they don't pay sales taxes on now," Irwin said. "That's the swap."
That includes personal services like dog grooming and lawn care and streaming services such as Netflix. Erwin said from the business perspective, not much will change. Erwin acknowledged that there will be some growing pains for the businesses that would have to collect new taxes if the proposal becomes law, but he doesn't believe those problems will be insurmountable.
"Not all of these are brand new things for these businesses," Erwin said. "We've already got dry cleaners and other people that do it. So this is not something that is out of the realm of reality that other people do."
Erwin doesn't expect sports betters and sports books to be impacted. He believes the proposed 36-percent tax increase on sports book profits will stall in the legislature.
"It'll be interesting to see what the legislature does," Erwin said. "I'm not holding my breath on that one."
Erwin says some of these measures are giving lawmakers heartburn. That, he says, could force the legislature to draft compromise bills before the special session ends on November 25.
Related
