Tax swap is not reform

Tax swap is not reform

Louisiana’s tax structure fails its citizens in two fundamental ways: First, it does not raise enough revenue to support people and communities by adequately funding good schools, reliable infrastructure and a strong safety net. Second, it is regressive – meaning low-income households pay taxes at higher rates than those at the very top.

A constitutional amendment on the Nov. 13 statewide ballot is well-intentioned, but would not fix these two basic problems. It also would make it harder to raise the revenue that’s needed to ensure that teachers are paid adequately, all citizens have access to quality health care and families have the support they need to thrive. 

A new policy brief by the Louisiana Budget Project explains constitutional Amendment 2, which would represent the most significant change to the state’s tax structure in nearly two decades. 

“Amendment 2 would eliminate an expensive tax break for the rich. But it would swap that for an unnecessary cut in tax rates for people and corporations,” LBP Executive Director Jan Moller said. “Unfortunately this well-intentioned reform would preserve a status quo where the richest Louisianans pay taxes at a lower rate than families that struggle to make ends meet.” 

While the ballot language is simple, it represents a complex package of bills that would change the way individuals and corporations pay taxes in Louisiana. While it is touted as “revenue neutral,” it would in fact reduce revenues that the state needs to support public services. “Trigger” language added to two of the bills would require automatic additional revenue reductions if certain economic and budget conditions are met.  

“These tax cut triggers are often framed as fiscally responsible, but there is nothing responsible about them. That’s because they’re based off of previous year estimates and could require lawmakers to prioritize tax cuts over everything else – even in a recession or a natural disaster like a hurricane,” Moller said.

Click here to read LBP’s full analysis of Amendment 2.