The End of Louisiana’s Income Tax? Debate Begins Today

Louisiana lawmakers will begin debate and discussion on proposed legislation that would effectively end Louisiana's income tax as we know it. Conversations and arguments concerning proposed legislation that would scale down and eventually eliminate the tax are scheduled to begin today before the House Ways and Means Committee. 

The legislation is HB 424 and if passed by both the House and the Senate in its current form would phase out taxes collected on the income of persons, estates, and trusts. The author of the legislation, Richard Nelson of Mandeville, says Louisiana needs to end its income tax if the state hopes to compete with other states that don't have a state income tax. Among those states are Texas, Florida, and Tennessee. 

Nelson's bill would gradually phase out the income tax as we know it over the next four years. According to the plan outlined by his legislation residents of the state would not be paying income tax to the state by the year 2027.

While this sounds like a great idea at first blush, you should be asking the question, how is the state going to make up the revenue generated by the income tax? Will state services be reduced? Budgets be cut? State employees laid off?

According to Nelson's plan, none of those things would happen. The revenue "shortfall" for lack of a better term would be made up by lowering the homestead exemption rate and by eliminating quite a few exemptions now allowed under the state's sales tax statutes.

Nelson noted in comments made to the Louisiana Radio Network that there are some 206 exemptions to the state sales tax laws right now. Closing the loopholes on just a few of those might be all that's needed to maintain the revenue stream without the influx of money from a state income tax.

It should be noted that in addition to serving as a State Representative from the Mandeville area, Richard Nelson is also a candidate for Governor of Louisiana. He stated that he intends to make the removal/repeal of a state income tax a part of his gubernatorial campaign platform.

The House Ways and Means Committee is expected to begin debate on this issue and several others when they meet in Baton Rouge later this morning.