Latest Weather Blog
What income tax breaks will remain under proposed changes? Louisiana House panel discusses
Related Story
BATON ROUGE — Louisiana's revenue chief laid out for a panel of state lawmakers Tuesday a proposal to replace the state's three-tiered income tax structure with a flat three-percent rate for everyone.
Richard Nelson told members of the House Ways and Means Committee that the goal is to provide the greater benefit to the most people. Overall, he said, changes in the individual and corporate tax structure would cost the state about $1.2 billion a year.
"We looked at what are the things that benefit a lot, you know, the vast majority of people versus things that just benefit some specific group," Nelson said. "Social Security is currently not taxed, so that will continue to not be taxed (under the proposed plan).
"The retirement benefits for public employees that retire from Louisiana or from the federal government also will continue to not be taxed," he said.
Also set for removal was a net capital gains deduction, which Nelson said benefits a "very small" number of people. He said that with the new tax structure, "they’ll have the benefits of the lower rates across the board so it made sense that that would be used to reduce the overall rate."
Gov. Jeff Landry said last week that the state's tax system harms its economic growth. He intends to have lawmakers return to Baton Rouge next month to take up the changes, which include increased taxes on goods and services like car washes, dog grooming and home repair. He said Louisiana should tax people's choices rather than their labor.
Under the current set-up, the first $12,500 of an individuals income is taxed at 1.85 percent, the next $37,500 is taxed at 3.5 percent and the amount over $50,000 is taxed at 4.25 percent.
In addition to setting a rate at three percent, the standard deduction would be set at $12,500 for individuals and $25,000 for married couples filing jointly and heads of household, among others.
Retirees would have a $12,000 income exemption, though a $1,000 deduction for the blind and those over age 65 would disappear. Nelson said those making less than $20,000 a year should see no tax liability.
Nelson's presentation to lawmakers continued later Tuesday with information on corporate taxes.
News
