Early voting starts Saturday. For many people in Louisiana, there are not a lot of high-profile items on the ballot this year, but that doesn’t mean there aren’t some important issues for voters to decide. Four constitutional amendments have been placed before voters and two of them deal with some major policy changes.
You might have seen a sign here or an ad there talking about support for constitutional amendments #1 and #2. You might have also wondered what they were all about. It’s good to understand them before going into the voting booth because they represent two significant improvements in tax policy that groups like CABL, PAR, and countless study groups and task forces have been talking about for years.
Amendment #1 has no impact at all on the average citizen and it doesn’t raise or lower anyone’s taxes. What it does begin to do is to ease some significant administrative burdens that Louisiana retail businesses face that their out-of-state online competitors do not.
In Louisiana, like everywhere else, businesses are responsible for collecting sales taxes on behalf of state and local governments. In virtually every other state those businesses remit those taxes to a single governmental agency for distribution. The same is true in Louisiana if you are an out-of-state online seller. But if you are a business operating statewide in Louisiana, you mostly have to deal with 54 different agencies, many with different rules, overseeing different exemptions, and often providing different interpretations of their laws.
Amendment #1 simply seeks to fix that by allowing every business – online or not – to send those taxes to a single agency. It’s a positive move that Louisiana should embrace just like virtually every other state.
Amendment #2 triggers implementation of a package of bills that swaps an unusual tax deduction that virtually no other states have for an across-the-board cut in individual and corporate income tax rates and a cut in corporate franchise taxes. For individuals, the top income tax rate would drop from 6% to 4.25% and similar reductions would be made in the other two brackets.
Because it’s a swap – loss of a deduction in exchange for lower rates – the impacts on people and the state are minimal. For the state it is basically revenue neutral, and the vast majority of individuals will see either a modest tax decrease or virtually no change at all.
But this change will greatly benefit Louisiana when it comes to making our state’s tax policy more attractive to people and businesses who might be looking to locate here. Why? Because our current tax burden is lower than our rates suggest thanks to a tax deduction almost no one has. If we get rid of what is basically an unseen deduction and replace it with lower rates that everyone will recognize, Louisiana’s tax policy becomes much more transparent and much more favorable to those looking to invest here.
Passage of these two amendments is important. They represent significant tax policy changes that Louisiana has needed to address for years. Now we have the opportunity, and we need to take advantage.
The Advocate/Times-Picayune helps make this case in its recent editorial endorsement, and CABL’s own analysis offers additional details and answers questions voters might have.
It’s not often that we as individual voters have the opportunity to do something directly that will move Louisiana forward. This year we do. Amendments #1 and #2 represent good faith efforts to make improvements in Louisiana’s tax policy that are long overdue. We should finish the work the Legislature started and support these amendments.