Louisiana lawmakers considering eliminating state income tax

One economist says it could lead to increased sales or property taxes.
Published: Sep. 6, 2022 at 10:15 PM CDT
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MONROE, La. (KNOE) - Louisiana lawmakers are considering a plan to eliminate the state income tax.

The House Committee on Ways and Means announced they would hold a meeting on Sept. 13 to discuss changes to the state tax code.

“People would only have to pay federal income tax, so that is kind of nice,” explained Dr. Tammy Johnston, an Economics Professor at the University of Louisiana Monroe.

State Representative Michael Echols (R-14) says eliminating the income tax is a must considering Texas has no income tax and Arkansas and Mississippi are considering the same.

“It’s like if Walmart decides to reduce the price of a banana to fifty cents and your another competitor down the street charging a dollar,” Echols said. “If I’m a consumer, I go where the taxes are least and the least impact, where I can buy more stuff.”

Dr. Johnston says lawmakers will have to find ways to make up for the budget shortfall if they do decide to eliminate the income tax.

“We are one of the lowest in the 50 states for property tax, so I would suspect that property tax would go up and gasoline tax,” said Dr. Johnston. “That is another one that states increase, and we are currently one of the lowest.”

Johnston adds that increased property and sales taxes disproportionately affect lower-income families.

“The higher income people spend a lower percentage of income on expenditures, especially necessities, so sales tax is a heavier burden on lower-income as well as a gasoline tax,” Dr. Johnston said.

Echols believes the change would have a limited effect on lower-income people and says it all evens out in the end.

“I know economists like to come up with different angles on why the poor will get hurt, but in this case, we have built in the current individual income tax system to mitigate any of the stress on the lower income earner,” said Echols.

Echols says he prefers eliminating some tax exemptions to compensate for the shortfall.