We can make tax reforms but they must be revenue neutral
Since 2016, we have made great strides in stabilizing Louisiana's budget, and our efforts are paying off. But remember, in four years--two more fiscal sessions from now--the .45 percent of sales tax rolls off. We already have one of the lowest
combined tax burdens in the country. So while we can and should make reforms, they must be revenue neutral. No one wants to go back to the fiscal mess that I inherited. And I won't let that happen.
Source: 2021 State of the State Address to Louisiana legislature
, Apr 12, 2021
Reform tax structure or face $1.3B fiscal cliff in 2018
Louisiana faces a more than $1.3 billion fiscal cliff on July 1, 2018--a point when a significant amount of revenue disappears and expensive credits and rebates return to their full amounts. This is the big moment. The structural deficits have gone on
for far too long. The resistance to doing what is right and necessary to fix this problem once and for all is no longer acceptable.
Last year, you created a task force that spent months studying the most responsible way to reform our tax and budget
structure. What we found from this review is that the options are no easier, or even substantially different, than the ones we have considered in the past. I fully support the task force's recommendations for structural tax reform. Many of the
recommendations of the task force were the very same solutions I proposed last year. So now we have a choice. We can simply go down the same road we have travelled time and again--hoping for different results. Or we can chart a new path.
Reduce sales tax; eliminate federal income tax deductibility
As a guiding principle, I have proposed that we move forward with the elimination of the fifth penny of sales tax as scheduled July 1, 2018, clean the remaining pennies, and model our sales tax structure utilizing best practices from other states.
In addition, I am asking you all to give 90 percent of the citizens of Louisiana an income tax cut, and simplify the corporate tax structure by reducing the current five corporate income tax rates to three lower rates.
Both of these shifts would be in exchange for eliminating the deductibility of federal income taxes--a practice that is only used in three other states, and is most beneficial to higher income earners.
And for C corps, those businesses that are taxed at the entity level, 80,000 out of 101,000 did not pay any income taxes. My proposal will ensure that those 80,000 C corps that pay no income taxes do their part
SB93: Prohibits the $25 credit for educational expenses for each child attending nonpublic elementary and secondary school if the tax deduction for payment of tuition is taken and establishes the Student Assessment for a Valuable Education (SAVE) Credit
Program.
Analysis by The Baton Rouge Advocate: Passage of the SAVE fund was crucial because Jindal was virtually certain to veto the budget if the Legislature hadn't approved the measure. The SAVE plan will impose a fee of almost $1,600
per student that the students won't actually pay because the plan will create tax credits--phantom tax credits in the eyes of critics--that offset the fee. The tax credits allow Jindal to offset all of the tax measures approved by legislators.
Legislative Outcome: Passed House 59-44-2, Vote #1102 on Jun/11/15; State Rep. John Bel Edwards voted NO; Passed Senate 30-9-0, Vote #1107 on Jun/11/15; Signed by Governor Bobby Jindal on Jun/19/15