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Louisiana House Committee Considers Eliminating Income Tax

The state’s House Ways & Means Committee began to study the possibility of removing individual and corporate income taxes, which would require significant reworking of property, sales or other taxes to offset the loss in revenue.

(TNS) — Despite huge budget and political hurdles, a key House committee Tuesday, Sept. 13, began to study the possibility of eliminating Louisiana's individual and corporate income taxes.

Rep. Richard Nelson, R- Mandeville, whose resolution earlier this year prompted the review, noted that growing states like Texas and Florida have no income taxes.

The fact that Louisiana does, Nelson said, "is one of the fundamental issues holding us back."

"We have an opportunity to build a better mousetrap," he said.

The issue will be scrutinized by the powerful House Ways & Means Committee, which will make recommendations to the full Legislature for the 2023 regular session, which begins April 10.

Rep. Stuart Bishop, R- Lafayette and chairman of the committee, said he plans to set up subcommittees to study various topics and lawmakers should plan to meet every other week for the next seven months.

"It is a big task," Bishop said.

The Legislature can tackle tax issues in odd years like 2023 but it is also an election year, which means any sweeping change in tax policy is unlikely.

Efforts to eliminate the state income tax have been floated in the past, including by Nelson in 2021, but never gained enough political traction to go far.

Doing so would require the state to revamp property, sales or other taxes to offset the loss of revenue for state services generated by personal and corporate taxes.

Personal income taxes are expected to raise $4.3 billion for state services by June 30, 2023 and corporate income taxes $650 million.

Louisiana's annual operating budget is about $39 billion.

One option would be to eliminate sales tax and other exemptions that hold down collections.

However, recent efforts to do just that produced a parade of lobbyists for a wide range of special interests intent on keeping their tax breaks.

The committee's study includes state tax exemptions and credits.

Nelson cast the issue as one linked to the state's growth, noting that Texas and Florida have grown about six times faster than Louisiana.

He said Louisiana last grew enough to justify an additional congressional seat in 1910.

The state's lack of population growth cost the state congressional seas in 1990 and 2010.

"And we are on deck to lose one in 2030," he said.

"At the end of the day we are a banana republic that has run out of bananas," Nelson told the committee.

Debbie Vivien, chief economist for the Legislative Fiscal Office, cautioned lawmakers that while the state is experiencing robust income tax collections today that is likely to change.

"And it can fall much quicker than you think,' Vivien said.

In 2021 Nelson pushed a series of bills that would eliminate the corporate and individual income taxes and raise the state sales tax rate from 4.45 percent to 6.1 percent while capping the local sales tax rate at 3 percent.

The proposals did not pass the Legislature.

(c)2022 The Advocate, Baton Rouge, La. Distributed by Tribune Content Agency, LLC.
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