Governor Jeff Landry's administration is weighing whether Louisiana should phase out the state's personal and corporate income taxes. Supporters say such a move would help simplify the state's tax code and attract new business to the state. Opponents worry about how the state will make up the lost revenue and, as a result, how the income tax cut would impact poorer Louisianans.
Daniel Erspamer is the president of the Pelican Institute, a conservative think tank.
"Let's keep in mind (that) we've had billion-dollar-plus surpluses every year for the last several years. He told WWL's Tommy Tucker that the state's current tax structure is too complex and too prohibitive for business to thrive in Louisiana.
"We've spent so much money (that) it's made it hard to bring the taxes in line," Espamer said of the state government and its budget. "We've been talking about this for a long time. The devil of course is always in the details, but if we're going to create a Louisiana where everyone can flourish and be competitive with our neighboring states who are also making significant progress on tax reform, we've got to be competitive and have a tax system that encourages growth and jobs."
Espamer says the state doesn't have to completely eliminate its income taxes to make the business climate more palatable. According to Espamer, a flat tax of around 3.5 percent would help Louisiana become more competitive on the business front and create new opportunities for the state's entrepreneurs and workers.
"We project that just in one year alone, you're talking about a billion-dollar increase to the state's economic activity and about 4,000 new jobs created, again, just in the first year alone just by getting to a flat tax let along phasing it out altogether," Erspamer said.
However, Louisiana Budget Project executive director Jan Moller says cutting out income taxes would cost the state nearly half of the money that comes into Louisiana's general fund.
"We get about $5.5 billion a year out of a $12 billion state general fund from income taxes," Moller said. "Any way you cut it, you can't run state government without that revenue."
Moller says getting rid of the income tax would force the state to find other ways to fill the budget. That, he says, would cost average Louisianans more money.
"If we get rid of the income tax, we have to replace that income with some other tax," Moller said. "You're going to have a math problem very quickly, and if you're going to replace that revenue with something else, then you have to start asking, well, somebody's going to pay more, and somebody's going to pay less. You're not really getting rid of a tax so much as you're shifting the tax burden, generally, from those at the very top to those at the middle and the bottom."
