BATON ROUGE, La. (BRPROUD) – Election day is fast approaching, and Louisianans will get to vote on four constitutional amendments. That could lead to major changes to state taxes.
Amendment 2 looks to make a tax swap:
Do you support an amendment to lower the maximum allowable rate of individual income tax and to authorize the legislature to provide by law for a deduction for federal income taxes paid?
Currently, people can deduct what they pay in federal income tax from what they pay in state income tax. If passed, this amendment would do away with that.
The goal is to not have to rely on federal taxes to determine a state tax break. The amendment could potentially lower income tax rates if there is a year with high state revenue.
“It eliminates that, which is typically a tax benefit for the rich but it substituted a giant tax break for the richest Louisianians as well,” said Director of Public Affairs for the LA Budget Project Davante Lewis.
The LA Budget Project is against the amendment. With the capping of the top income tax rate, the organization fears it would make it harder to have tax reform in the future. The group said this would take revenue away from the state. Those in support of the measure, such as the Louisiana Association of Business and Industry, said it won’t change how much money comes in.
“But the goal is revenue neutral and the cool thing is once this amendment is passed, the legislature then by a simple majority vote will be able to lower income tax rates at any point in time,” LABI President and CEO Stephen Waguespack said.
This change would help the state have one of the lowest income tax rates.
“If you look around the south, a lot of the states that are getting jobs in investment, they don’t have an income tax and in Louisiana, we have the highest income tax rate in the south and it makes us uncompetitive,” Waguespack said.
The Public Affairs Research Council said taxpayers would likely not see much of any changes in how much they need to pay. It could bring a small tax cut to all, with big earners getting the largest cut, including the removal of the franchise tax.
“We should not be cutting taxes, we should actually be raising revenue so we can fully fund our schools, we can have affordable higher education…,” Lewis said.
If the amendment is not passed, the tax deductions and franchise tax will remain the same.
The election will be on November 13th. Early voting is set to begin next week.
Some polling sites have changed due to hurricane damage and you can find where you need to vote here.
Read the LA Budget Project’s take on the amendment here.
Read LABI’s guide here.
Read the Public Affairs Research Council’s nonpartisan guide to the amendments here.