Thursday, January 27, 2022

Louisiana voters tackle sales and income tax issues

BATON ROUGE, Louisiana (AP) – On Saturday, Louisiana voters decided whether to support two of the Republican legislative leaders’ priorities: a tax reshuffle plan that would separate state income tax collections from federal tax payments and a move towards centralizing state sales tax collection.

Polls were closed and officials were tallying statewide election results on Saturday night. Complicated tax proposals promoted by business lobbying groups were among four changes to the Louisiana constitution on the ballot, and the only problem faced by all voters across the state.

The Associated Press does not take stock of the race.

The tax amendments were overwhelmingly supported by Republican and Democratic lawmakers, as well as by Democratic Governor John Bel Edwards.

Supporters called the measures a step towards reforming the overly complex government tax system. But outside organizations criticized the sales tax proposal as a government takeover, and the income tax measures too generous for businesses and the rich at the expense of the poor.

The elections were postponed by five weeks due to Hurricane Ida.

CONSTITUTIONAL AMENDMENT 1

The first amendment will kickstart the process of consolidating sales taxes through an eight-person commission rather than more than 50 local government agencies, from sheriffs to school boards.

Local government associations will receive four commission seats. The Revenue Department, the Governor, the Speaker of the House of Representatives, and the President of the Senate appoint the remaining four members.

Supporters said Louisiana is one of three states that collect sales taxes through such a hodgepodge of local government agencies. This makes it too complex and costly for businesses that have to collect and remit sales taxes across multiple parishes, they said.

But the details of the commission’s work have yet to be decided by lawmakers at a future legislative session, and this casts doubt on the efforts.

Meanwhile, New Orleans Mayor Latoya Cantrell has strongly opposed relinquishing her tax-collection powers and said the commission could withhold sales taxes owed to municipalities when government officials are unhappy with local decisions.

CONSTITUTIONAL AMENDMENT 2

The second tax amendment will lead to the adoption of a package of bills eliminating personal income tax and corporate tax deductions for federal income taxes paid in exchange for a reduction in income tax rates.

Louisiana will also eliminate corporate tax on franchises for small businesses, lower the rate for others, and do away with most of the excess detailed deductions levied on middle and high-income earners.

But voters don’t necessarily learn this from the language of the one-sentence ballots, which suggests that voters are simply deciding whether to cut their taxes, rather than negotiating a tax trade-off that doesn’t cut everyone’s tax bills.

Proponents say the current system makes Louisiana’s tax collection too volatile and difficult to control. When federal income taxes go up, Louisiana collects fewer state taxes. When federal income taxes go down, state tax collections go up.

Opponents said the tax swap would benefit corporations and wealthier residents. They criticized triggers in legislation that would lower tax rates in the coming years if Louisiana achieves some revenue growth, rather than allowing the state to spend that money on health care, education and other services. And they objected to a provision that prohibits lawmakers from raising personal income tax rates above 4.75% without voter approval.

Analysis by non-partisan Legislative Economist Greg Albrecht found that most individual income taxpayers who do not list specific categories will see tax cuts, while those filing tax returns are likely to pay more, and are estimated to be less than 2 % of those filing corporate taxes will see an increase in tax bills. …

OTHER AMENDMENTS

The two remaining constitutional amendments will allow some local dam areas to increase their tax powers and allow lawmakers to cut protected funds more deeply when the state faces budget deficits.

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Follow Melinda Deslatte on Twitter: http://twitter.com/melindadeslatte

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