Will Louisiana voters waive federal withholding as a result of decrease state income tax charges?

SHUT DOWN

Why taxing, say 22% of your income, is much more complicated than you might think. Here you can see what income taxes you actually pay.

USA TODAY

Louisiana voters will have the final say on whether to change the state's income tax structure after Governor John Bel Edwards signed two bills that trigger elections in October to amend the constitution to revise rates and deductions.

The two bills passed by the Louisiana Legislature would lower income tax rates for individuals and businesses in exchange for losing current deductions for federal income taxes paid.

Republican Senator Bret Allain von Franklin and Republican MP Stuart Bishop von Lafayette both led efforts as chairmen of tax committees in the Senate and House of Representatives.

Louisiana currently allows taxpayers to deduct the federal income taxes they pay from the calculation of their state income taxes. As federal income taxes rise, the state levies fewer state taxes. When federal income taxes go down, state tax revenues go up.

This puts Louisiana's income tax revenue at the mercy of federal tax law, adding to a complicated tax structure that economists and government groups such as the Public Affairs Research Council have criticized for decades.

"(The package begins) the process of simplifying our overly complex and onerous tax law that has shifted jobs and opportunities to other states and has harmed Louisiana's families for far too long," said the Pelican Institute, a conservative public policy think tank.

But the left-wing Louisiana Budget Project was less enthusiastic. “This means that tax cuts are at the forefront,” said Jan Möller during the debate.

The package would also remove corporate franchise tax for small businesses and lower the tax rate for others.

If voters gave up their tax break for federal income taxes paid, state income tax rates would go from 2% to 1.85% for the first $ 12,500 of income, from 4% to 3.5% for the next $ 37,000, and from $ 6,000 % reduced to 4.25%. for $ 50,000 and more.

Companies pay 3.5% on the first $ 50,000 in revenue, 5.5% on revenue over $ 50,000 and up to $ 150,000, and 7.5% on revenue over $ 150,000. Current rates range from 4% to 8%.

The complicated swap would be largely income-neutral for the state, which Edwards said would be necessary to support the package.

The Associated Press contributed to this report.

Greg Hilburn reports on government policy for the USA TODAY Network of Louisiana. Follow him on Twitter @ GregHilburn1.

Read or share this story: https://www.theadvertiser.com/story/news/2021/06/23/income-tax-louisiana-voters-give-up-federal-tax-deduction-lower-state-income – Tax rates / 5299358001 /