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Tax Reform and Income Inequality


Yesterday, we heard about tax reform from state Revenue Secretary Kimberly Robinson, who says, “We want every taxpayer treated fairly. We don’t want a particular group to feel that they are paying more taxes than other people.”

Today we talk with Jan Moller, director of the Louisiana Budget Project, who says the tax reform report is a good start.

“The problem is that it doesn’t quite go far enough and it wouldn’t raise enough revenue to fix our structural budget deficit.”

Moller, who served on the Tax Reform Task Force, is also concerned the plan doesn’t really address income inequality.

“This new report from the Center on Budget and Policy Priorities found that income inequality is a problem in every single state in America, but Louisiana is fourth highest in the rate of income inequality compared to all the other states.”

And, he notes, the data used for that report was compiled before Louisiana raised sales taxes this year – a form of taxation that disproportionately impacts lower income households harder than those who earn far more.

“Right now we have a tax system where the poorest 40% of households pay taxes at more than twice the rate of the richest one-percent of Louisianans.”

Moller says again that the tax reform plan is a start toward addressing the unfairness of the Louisiana’s current tax system.

“Going down on sales tax and going up on income tax would actually help reduce income inequality. It certainly wouldn’t fix the problem.”

He says there is one thing would help both with income inequality and the budget deficit: eliminating deductions for federal income taxes paid.

“The federal income tax deduction costs us almost a billion dollars a year, and it accrues – by and large – to the very wealthiest taxpayers.”

Moller believes that’s one way the state further disadvantages those on the lower end of the socio-economic spectrum, and the upcoming legislative session focusing on tax reform could do much toward greater fairness in Louisiana’s tax code.

“What we really need to do is get rid of some of these massive loopholes that keep us from collecting those taxes that are owed by people at the very highest end. And then we need to make sure businesses pay their fair share.”