If voters accept Republican Gov. Jeff Landry’s tax reform package next March 29, Louisiana’s income taxes will be going down and the state’s sales taxes will be going up. Those citizens with the highest incomes will enjoy extremely large tax cuts and all citizens, including those with the lowest incomes, will be paying the higher sales taxes.

Although there are a number of positives from the recent special tax reform legislative session, the job isn’t complete. The Advocate reported on what officials at some organizations had to say about the session.

Landry called the session “a win for the people of Louisiana, a win for the businesses in Louisiana and a win for those looking for a reason to call Louisiana home.”

Unfortunately, it wasn’t a total victory. Perhaps the two major failures of the session were the Legislature’s refusal to levy the sales tax on 41 personal services that aren’t currently taxed and its unwillingness to end many of the state’s $7-plus billion in tax breaks.

If legislators had voted to tax those 41 services as other states have done, that would have eventually raised $482 million annually and they might have avoided a bigger sales tax increase that affects all of the state’s taxpayers.

The Advocate reported the highest combined state and local sales tax rates, highest in the country, ranged from 9% in Lafayette to 10.99% in Monroe, two of the state’s major population centers.

Manish Bhatt, a state tax analyst for the conservative Tax Foundation, talked about Landry’s statement that because of his tax reform plan there would be, “No free rides, no special treatment, no preferential advantages for the chosen few.”

Bhatt said, “In having incentives that favor an industry or business, the tax code is picking winners and losers. That’s not what a sound tax policy is.”

Landry earlier said enacting his plan would move Louisiana up from 40^th place on the Tax Foundation’s Business Tax Climate Index to 8^th  place. However, Bhatt said the final version of the plan moves Louisiana up to 26^th place.

“There’s room for further improvement,” Bhatt said.

Neva Butkus, state policy analyst for the Institute on Taxation and Economic Policy, said the tax plan favors the wealthy.

The Advocate said the Butkus analysis shows the poorest 20% of families, who earn less than $22,000 annually, will pay $5 more per year because of the 5% state sales tax. That isn’t much, of course, but the top 1% of families, with an average annual income of nearly $1.9 million, will receive an income tax cut of $15,431 per year.

Peter Robins-Brown, executive director of Louisiana Progress, a Baton Rouge nonprofit, said, “To no one’s surprise, the biggest beneficiaries were the same people who always win in Louisiana’s system — the rich and powerful.”

Landry and legislative leaders used some last minute tactics to get legislators to approve the 1% increase in the state sales tax. They combined that bill with the one lowering income taxes.

Senate President Cameron Henry, R-Metairie, said the bills were combined to make it easier to get the two-thirds vote needed to pass tax measures, since legislators who wanted the tax cuts would have to vote to pay for it, too.

Legislators also created a dilemma for those who may not be happy about an amendment that rewrites Article VII, the financial section of the state constitution. Three education trust funds that are being used to pay off some retirement debt are repealed in that amendment.

By paying off some retirement debt, local school boards would be able to give teachers a permanent $2,000 annual pay increase and support workers a permanent annual $1,000 increase. It won’t happen if voters reject that amendment next March 29.

The amendment also gives parishes the option of repealing the inventory tax, takes most property tax exemptions out of the constitution (not the homestead exemption) and makes it harder to create more tax breaks.

The Advocate in an editorial said it was taking no position on the amendment but hoped tax reform would continue at the Legislature’s spring fiscal session and beyond.

Barry Erwin, president of the Council for a Better Louisiana (CABL), said in a letter to this newspaper that lawmakers have completed step one but with the highest combined sales tax in the country there needs to be a step two.

It is abundantly clear that effective Louisiana tax reform is still incomplete.

Jim Beam, the retired editor of the American Press, has covered people and politics for more than six decades. Contact him at 337-515-8871 or jim.beam.press@gmail.com.

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