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Governor Lays Out Tax Reform Package

Gov. John Bel Edwards
Sue Lincoln

Governor John Bel Edwards unveiled his plan for comprehensive tax reform Wednesday, and it includes cuts to income tax rates.

“More than 90% of individual tax filers in Louisiana would see an income tax cut.  The current rates of two, four and six percent  would be lowered to one, three and five percent -- while eliminating the deduction for federal income taxes,” Edwards stated.

“My plan calls for the elimination of the deduction for federal income taxes for corporations as well.  But in doing that, we also propose to decrease the current five brackets down to three brackets of lower rates.”

So how do we afford this when the state is already struggling fiscally? The Governor says we implement a new “corporate activity tax.”

“Too many very profitable businesses don’t pay a penny of income taxes in Louisiana,” he said, adding, “In 2015, there were 149,287 corporate tax filers in Louisiana.  Of that number, more than 129,000 paid absolutely nothing in state income taxes -- meaning the average middle class income earner in our state paid more in income taxes than some of the largest companies doing business in our state.”

The corporate activity tax would charge a flat $250 per year on gross receipts up to a half million dollars, $500 on gross receipts up to a million dollars, and $750 on gross receipts up to $1.5-million. Above that, businesses would pay 35 cents on each thousand dollars of gross receipts.

Edwards says this ends up being essentially revenue neutral, and solves the fiscal cliff we face when the 5th penny of sales tax rolls off July 1, 2018 – as long as the entire package of reforms passes.

“We cannot pretend that we can only cut our way out of this problem and continue to provide the services our constituents need and deserve,” Edwards warned.