By William Patrick | The Center Square
Louisianans could enshrine an income tax cut in the state constitution Saturday, as voters in all 64 parishes will consider four ballot amendments dealing with tax and budget issues.
A proposal known as Amendment 2 offers to decrease the maximum individual income tax rate from 6% to 4.75%, beginning next year.
According to the Louisiana Department of Revenue, the top tax rate applies to individuals making more than $50,000 annually and couples making more than $100,000 annually.
A “yes” vote also would remove the ability to deduct federal income taxes from an individual’s state income tax liability, which is currently allowed.
Business groups such as the Louisiana Association of Business and Industry (LABI) support the measure, saying it would “simplify” the tax code and make the state’s business environment more competitive.
The Council for A Better Louisiana (CABL), a nonpartisan public interest group, supports Amendment 2 and notes it would apply to corporations. In an election analysis, CABL said reducing the income tax rate would be “revenue neutral to the state and taxpayers.”
The Louisiana Budget Project disagrees, however. The Baton Rouge-based nonprofit opposes the tax cut, which it characterizes as a “tax swap” that would benefit high-income individuals and corporations.
“Amendment 2 would preserve a status quo where a majority of Louisianans struggle to make ends meet, public colleges and universities remain underfunded and funding for early childhood education remains scarce,” the organization said.
A “no” vote on Amendment 2 would leave the current 6% tax rate and federal deduction in place.
The measure follows Amendment 1 on the ballot. It would attempt to streamline sales and use taxes throughout Louisiana by creating a central sales tax authority, if approved.
According to the Public Affairs Research Council, the Department of Revenue collects a state sales and use tax of 4.45%, while local governments collect sales and use taxes averaging around 5%.
Louisiana’s 64 parishes also have differing tax policies and policy interpretations that complicate tax collection and remittance, a PARC election report said.
“This highly decentralized system is unusual; nearly all other states allow a central collector who remits the revenue to the appropriate state and local jurisdictions and acts as the central authority for how and when taxes should be applied,” the report said.
A “yes” vote would centralize the current system; a “no” vote would leave it unchanged.
LABI, which represents 2,000 Louisiana employers, is urging passage of both Amendments 1 and 2.
“Louisiana’s business tax climate ranks among the worst in the nation,” LABI President and CEO Stephen Waguespack said. “A pair of tax reform measures on the November 13th ballot could change that, enacting constitutional amendments to finally simplify our system, meaning lower tax rates and more jobs in Louisiana.”
The remaining two ballot proposals deal with levy districts and state budget deficits.
Amendment 3 asks voters to consider a constitutional provision that would allow levee districts created after 2006 to raise taxes in districts where a majority of voters approve.
The local tax revenues would be used for “constructing and maintaining levees, levee drainage, flood protection and hurricane flood protection.”
Amendment 4 would increase the amount of money state lawmakers could use to cope with budget deficits.
The Louisiana Constitution currently allows 5% of dedicated funding to be redirected to items other than what the funding was originally intended for. Amendment 4 would increase the limit to 10%.
Each of the four ballot amendments require a majority vote to pass.