Issue Position: Tax System

Issue Position

Louisiana's current tax system is outdated and broken with high rates and low returns. The system contains numerous tax exemptions and credits that picks winners and losers through the tax code, offering specific companies huge tax breaks that make taxes much higher for the average citizen. In the 3 years, Louisianans have faced two sizable tax increases. In addition, the current system raises state taxes every time citizens receive a federal tax cut. From taxes on capital stock to targeted tax preferences, the state discourages jobs and economic activity in Louisiana. Louisiana must reform the tax code in order to discourage tens of thousands of residents from leaving the state and incentivize others to come and remain in Louisiana.

Louisiana is ranked 49th in sales taxes with the 2nd highest sales tax in the nation. Ideally, Louisiana must reform taxes through means of lower tax rates with a more stable revenue stream. The first of these reform actions to make Louisiana 40th in taxes in 4 years would be to create a simpler, flatter tax by eliminating the upper and lower tax brackets and implementing a 4% across the board income tax. This is a pro-growth tax and would remove thousands of Louisiana residents from tax liability by moving all within the 2% bracket to the 0% bracket and those within the 6% into the 4%. The next step would be to eliminate some state deductions of federal taxes paid. Although at first glance, this scares Louisiana residents, but as examined more carefully, it actually saves Louisiana residents money. By eliminating this deduction, Louisiana would no longer be raising taxes when there is a federal tax cut. Louisiana residents would be able to continue to keep the money saved from a federal tax cut while still paying the usual state tax rate. This would allow the state to use the savings from this reform to fund lower rates overall.

We must lower our sales tax rate and rely more on assessments from property tax which encourages a more predictable and stable revenue stream along with more local spending. Louisiana can encourage business growth by eliminating the corporate franchise tax, while reducing exemptions and tax credit programs creating a simpler and more modernized tax code. All of these would encourage Louisiana residents to remain in the state while paying lower tax rates overall. With the reduction so many tax exemptions and tax credits for specific business, Louisiana could offer much lower tax rates to citizens while receiving a comparable, much more stable and reliable revenue stream. The state would be forced to stop picking winners and losers in the tax system by creating a more modernized tax code.

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