Could Louisiana End State Income Tax? Sponsor of new bill says it’s doable

Louisiana’s state income tax is part of an antiquated system that has stifled growth and caused residents to flee to Texas and other states, the sponsor of an attempt to tax said Monday. abolition of tax.

Rep. Richard Nelson, R-Mandeville, also said he was “definitely” considering a 2023 gubernatorial run.

Nelson introduced bills in 2021 to abolish the income tax, which he says generates between $4 billion and $4.5 billion a year.

The effort failed to gain traction, and even today the proposal is seen by many as a pie-in-the-sky plan that will never pass.

But Nelson said residents of the state would live an average of 3.5 years longer and see their wages increase by about 33% if they moved to Texas, which has no state income tax. ‘State.

“It’s a huge disparity that we’re going to have to address and we won’t be able to do that by rearranging the lounge chairs on the Titanic,” he told the Press Club of Baton Rouge.

“You’re going to have to make significant structural changes,” he said.

Nelson’s plan is under interim review by the House Ways & Means Committee.

He said he plans to introduce legislation for the 2023 legislative session while acknowledging that the effort faces enormous political challenges, including the fact that 2023 is an election year for the governor and members of the House and Senate.

Nelson said eliminating the state income tax was a “very relevant campaign issue” and would give state residents the choice of “what kind of future they want.”

“Ultimately, we have to look at reinventing the Louisiana wheel if we’re going to get out of this cycle of just kicking the box,” he said.

Governor John Bel Edwards is in his second and final term and steps down in January 2024.

Last month, Administration Commissioner Jay Dardenne warned against any election-year tax overhauls and said replacing the money lost by removing income tax from the State was a huge problem.

Nelson said he wanted his proposal to be revenue neutral.

A key component would be phasing out the state’s industrial tax exemption program, which allows manufacturers to waive property taxes for a decade.

Edwards changed the rules to limit the tax relief to 80% for five years, with an option for another five years, and allows local governments to veto the decision.

Nelson said phasing out the program would save the state about $2.5 billion of the $4.5 billion lost if personal and corporate income taxes were abolished.

He also wants to reduce the Homestead Exemption, which gives homeowners property tax relief on the first $75,000 of the value of their principal residence, to 25%, which would generate an additional $600 million.

Nelson said it would be possible to reduce the long-established homestead exemption if it was part of a tax overhaul.

“Everyone is going to have to give up something to get this done,” he said.

The lawmaker also wants to raise the state sales tax from 4.45% to 6.1% and cap what local governments can charge.

Since the package would be a constitutional amendment, it would require the support of two-thirds of the House and Senate – 53 and 26 votes respectively – a statewide majority vote.

The session begins on April 10.

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