FOR IMMEDIATE RELEASE
Jan Moller (225) 614-9126
With time running out in the fiscal year, the temporary 1-cent sales tax increase proposed by Gov. John Bel Edwards is a necessary tool to stave off devastating cuts to healthcare and higher education programs. But low-income Louisianans will bear a disproportionate burden from this tax, which is why the Legislature should combine it with an increase in Louisiana’s Earned Income Tax Credit.
In a new blog post, LBP’s Grace Reinke shows how doubling the EITC will protect the poorest from bearing the brunt of the state’s fiscal crisis. The Institute on Taxation and Economic Policy calculates that the poorest 20 percent of Louisiana households – with average incomes of $12,000 per year – would pay an extra $107 per year if the sales tax is raised by a penny. Households in the second-poorest income bracket, with incomes between $19,000 and $37,000 a year, would pay an average of $228 per year in extra taxes.
“The Earned Income Tax Credit is proven to reduce poverty by putting money back in the pockets of families that work hard but struggle to make ends meet,” LBP Director Jan Moller said. “Louisiana’s budget problems are extremely serious, and there is no doubt that extra revenues are needed. But policymakers also need to make sure the most vulnerable families are protected.”
Doubling Louisiana’s EITC to 7 percent of the federal credit would not offset the full impact of a sales tax increase, but would give some relief to families that need it most. To read more about the effects of the sales tax increase and the EITC, read the full blog post by clicking here.