Editor’s note: Let’s start the conversation about tax reform

For decades, Louisiana officials and think tanks advocating tax reform have always faced the same obstacle: Changing our byzantine tax system, even in a smart way, inevitably creates winners and losers. And when potential losers raise their voices, the conversation usually stops.

During those same decades, two alarming trends took hold. Louisiana’s economy lagged significantly behind those of other southern states. And we began losing Native people at an alarming rate and were unable to attract enough new residents to replace them, even as our neighbors’ populations grew.

The reasons are numerous, and their relative importance can be fairly debated. But because certain parts of Louisiana’s tax structure are discouraging economic growth and investment, we applaud Gov. Jeff Landry and his team for doing so. starting a tough conversation on decisions in the special legislative session that begins Wednesday.

There’s a lot to unpack in Landry’s plans, and we’ll admit that we like some parts more than others.

Overall, the governor wants to eliminate taxes that most states do not collect and lower existing tax rates that have been artificially high to offset overly generous benefits.

The basis of the plan is the extension of the temporary 0.45% sales tax it expires on June 30, avoiding a looming $450 million fiscal cliff. This starting point makes sense, and we’re glad to see the Republican governor taking a pragmatic approach to the revenue side of the equation.

We’re not necessarily sold on Landry’s proposal to replace Louisiana’s three-tier personal income tax, which tops out at just 4.25%, with a flat rate of 3%. This plan gives Louisiana’s wealthiest residents the biggest real-dollar tax breaks. We believe it is fairer for those most able to contribute to pay a slightly larger share.

However, we are pleased that Landry is balancing his proposed flat income tax by substantially increasing the standard deduction, which will benefit low-income people. In fact, almost everyone will pay less in combined sales and income taxes, according to a RESET Louisiana analysis.

On the revenue side, we are open to extending the sales tax on services and digital purchases, but we are concerned that taxing things like home renovations could negatively impact the homebuilding sector.

Regarding tax incentives, we have long been skeptical of film tax incentives, which have benefited Hollywood but failed to create a sustainable film industry in Louisiana. However, we believe that eliminating the historic revitalization tax credits would severely hinder revitalization efforts in communities large and small throughout Louisiana.

We also have mixed feelings about the other proposals on Landry’s 23-item agenda. For example, we support constant salary increases for teachers is funded by paying off pension obligations, thereby saving millions in interest payments while it does not undermine the long-term stability of the Louisiana Teachers’ Retirement System. Likewise, we like Landry’s plan to grow Louisiana. reinforced roof subsidies for property owners under the state’s insurance pool, which could reduce property insurance costs for some homeowners, but we’re waiting for details.

However, we see no reason to address juvenile justice issues or changes to the state’s court system in an already compressed special session, as Landry proposes.

Any tax system is complex, and Landry’s proposal is designed to work as a whole. To ensure long-term fiscal stability, the governor’s plan includes significant constitutional changes that voters must approve in March. For this reason, we urge legislators to make any tax changes they pass in November conditional on subsequent voter approval of those constitutional changes. Otherwise, we will continue to implement tax reform piecemeal – and risk unforeseen financial problems in the future.

In fact, with the $450 million fiscal cliff approaching, the only truly pressing issue is extending temporary sales taxes beyond June 30th.

We welcome this overdue conversation on tax reform, even if this session marks just the beginning.