It’s Always Tax Day in Louisiana
April 15th is Tax Day, otherwise known as the day that people hurriedly buy tax preparation software and search frantically for their W-2 form. While filing your annual taxes is important, unless you want the IRS coming to your door, it’s not the only day that you actually pay taxes.
Payroll taxes, social security taxes and gas taxes are just some of what you pay the federal government over the course of the year. But of course, the federal government isn’t the only entity taking a part of your pay. States and localities also put a large tax burden on citizens, particularly those in our great state of Louisiana.
Louisiana has the 2nd highest sales tax rate in the nation with an average rate of 9.45%. The only state with a higher sales tax rate is Tennessee, but the Volunteer State just eliminated all income taxes, which Louisiana is far away from accomplishing.
Even more frustrating, the sales tax rate varies widely across the state, as parishes often implement their own rates and even pick and choose what items to tax! Needless to say, this tax structure is a cause of great confusion for folks in Louisiana.
This structure is also causing major headaches when it comes to the collection of sales taxes for online purchases. Since so many parishes have different tax structures, businesses often have trouble figuring exactly out how much in taxes they owe. With its high rates and confusing configuration, Louisiana’s sales tax structure is in desperate need of reform.
Of course, Louisiana’s sales taxes isn’t the only area of the tax code that needs to change. Both the personal and corporate income tax is a hodgepodge of special carve outs and exemptions, which help few and raises rates on everyone else.
Louisiana has the 2nd highest personal income tax rate in the South, along with a shockingly small 0 percent rate. This means that low wage-earning Louisianans are not only paying high rates, they are paying them on almost all of their income. This is especially harmful to the hardworking people who find state government taking some of their pay despite earning low incomes.
While not directly tied to the pocket book of Louisiana citizens, the corporate income tax structure suffers from many of the same issues as the personal income tax.
Louisiana has the highest corporate income tax rate in the entire South and one of the highest in the nation. This high rate causes companies to spend their time lobbying the legislature for special carve outs and exemptions worth billions of dollars a year. This system leads to high complexity and costs for the little guys, while well connected businesses pay very little or even nothing in corporate taxes.
This drives away businesses from the state and makes it even more difficult for the people of Louisiana to locate a good paying job, if they can find one at all.
Given all the current system’s problems, tax reform is sorely needed in the Pelican state. Thankfully, there are a variety of proposals in the legislature that include ideas from the tax reform plan released by the Pelican Institute under its “A Jobs and Opportunity Agenda for Louisiana.”
Among the solutions offered is the Pelican Institute’s suggestion to lower both the personal and corporate tax rates, along with simplifying the system by ending many of the special interest deductions that plague the current tax code.
Congress proved that transformational tax reform is possible, and the U.S. is benefiting through more economic growth, more jobs and more money in the paychecks of Americans. The Louisiana legislature has the ability to accomplish the same goal and help bring jobs and opportunity to Louisiana.