Louisiana is $440 million short of the revenue needed to fund state government at current levels in next year’s budget. The problem gets much worse in the 2018-19 fiscal year, when more than $1.3 billion in temporary taxes are due to expire – creating a “fiscal cliff” that would require drastic cuts to state services if left unaddressed.
To plug these holes, Gov. John Bel Edwards has proposed a package of tax reforms that would overhaul the state sales tax, the personal income tax, and the taxes that corporations pay. If all elements of the plan are approved, it would raise enough revenue to plug the coming fiscal year’s $440 million shortfall and avoid the 2018-19 fiscal cliff. It would generate about $411 million per year in new, recurring revenue and would provide a net tax cut to 95 percent of Louisiana families. The largest effective tax cut would go to the middle 20 percent of taxpayers – households earning between $36,000 and $56,000 per year.
The plan would also make Louisiana’s tax structure more fair. But this fairness is tied to the changes proposed for the personal income tax, which have to pass both the Legislature and a vote of the people.
Click here to read the full analysis of the plan.