Tax reform in the November 13 election

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ALEXANDRIA, Louisiana (KALB) – The fall 2021 election is less than a month away, and many Louisiana lawmakers are seeking public support for four proposed constitutional amendments, two of which are slated to be part of the largest tax reform legislation in the ‘State for almost 40 years.

Proposed Amendment # 1 is intended to change the collection of state sales taxes. Here’s what voters will see on the ballot:

PROPOSED CHANGE # 1 – Rationalization of sales tax

“Support an amendment allowing the legislature to provide for simplified electronic filing, electronic remittance and collection of sales and use taxes levied in the state by the Commission for Rationalized Sales and Use Taxes of the State and region and provide funding, duties and responsibilities of the commission? “

Vote “Yes”: supports the creation of the National and Local Commission for Simplified Sales and Use Taxes. The commission would provide streamlined electronic filing and collection of all sales and use taxes.

Vote “no”: would oppose the creation of the National and Local Commission for Simplified Sales and Use Taxes.

Currently, each parish collects state sales taxes through a single entity. For example, in the parish of Rapides, this entity is the office of the sheriff of the parish of Rapides. Business owners operating in multiple parishes must submit sales tax returns to each parish in which they operate. With this amendment, those submissions would go through a single entity across the state. Historically, any effort to change this system has been canceled. So when the legislation was introduced this time around, lawmakers created a task force made up of local and state representatives to help create a system that works at all levels. This working group decided to create a commission of eight representatives, four appointed by the State and four appointed by local agencies.

  • On the state side:
    • A person appointed by the Ministère du Revenu
    • A person appointed by the governor
    • A person appointed by the President of the Senate
    • One person appointed by the Speaker of the House of Representatives
  • Local side:
    • One person appointed by the Association of School Boards
    • One person appointed by the Police Jury Association
    • A person appointed by the municipal association
    • A person appointed by the Sheriff’s Association

While there are discussions about changing sales tax rates in different jurisdictions, this will not be the case in this law. Sales tax rates and exemptions will remain constant across the board. In addition, funding for the changes associated with this amendment will come from revenues collected from two other taxes collected by the state.

“Remote sellers who use the online system get one percent of what they collect from all of those businesses and out of state that sell merchandise online,” said Beaullieu, representative for District 48, l one of the lawmakers speaking at North Rapides Business. and the Industry Alliance meeting on October 18. “This percent will be one of the main sources of funding for this commission. And there’s a portion of the motor vehicle sales tax that’s going to be added to that as well.

According to Beaullieu, the business ranking system will not change either.

While there were concerns that this proposed amendment would put in place tax collection in Baton Rouge, the commission will oversee collections and develop rules and regulations to streamline the verification process. The current local collectors in each parish will retain the audit process, ensuring that the money is redistributed efficiently in their parishes.

Currently, Louisiana is one of only two states that does not have a centralized sales tax system.

Proposed amendment # 2 deals with taxes on state income, in particular the effort to lower rates. Here’s what voters will see on the ballot:

MODIFICATION PROPOSAL # 2 – Tax reform

“Do you support an amendment to lower the maximum allowable rate of personal income tax and to allow Parliament to legislate a deduction for federal income taxes paid?” “

“Yes” vote: would reduce the maximum personal income tax rate from 6% to 4.75%. This amendment would remove the deduction from state income taxes paid to the federal government.

Vote “no”: opposes the lowering of the maximum rate of personal income tax from 6% to 4.75%.

This proposed amendment has three important elements.

First, the amendment would remove the current state income tax brackets from the constitution and replace them with new brackets where the maximum bracket cannot exceed 4.75%. To start with, the higher bracket will be 4.25%.

This is what the current tax bracket looks like for a single taxpayer:

  • 2% on the first $ 12,500 of net income
  • 4% on the next $ 37,500 of net income
  • 6% on net income over $ 50,000

If this amendment is adopted, that 6% bracket drops to 4.25%. In addition, the element would also eliminate the reduction in federal income tax paid on an individual’s taxable income.

The next element of this amendment would affect both individuals and businesses. This element is the Franchise Tas, which is a tax on the capital value of your business. Small businesses with an assessed value of less than $ 300,000 will no longer pay franchise tax, which accounts for about 85% of businesses in Louisiana. For other businesses whose assessed value exceeds $ 300,000, the franchise tax rate will decrease. Lawmakers hope the franchise tax rate will eventually disappear completely as the state becomes more competitive for businesses and collects more revenue.

“This lowers the rates for every taxpayer in Louisiana,” Beaullieu said. “And by becoming more attractive, we will be able to create more jobs and bring more business to Louisiana. It’s a win-win for the whole state.

The third element simplifies the corporate tax brackets.

Currently, Louisiana is ranked 49th nationally in sales tax administration. The Tax Foundation and the Council on State Taxation ranked Louisiana 42nd on “business friendliness.” If Proposed Amendments # 1 and # 2 pass, it will raise the state to somewhere between 36th and 38th. Additionally, if Amendment Proposal 2 passes, Louisiana will have the lowest personal tax rate in the South and one of the nation’s five lowest of the 42 states with income taxes. individuals in place.

Bills attached to these amendments include House Bill 199 and Senate Bill 159. Both were passed by the House and Senate with a majority vote, but if voters don’t pass them, they won’t continue in Gov. Jon Bel Edward’s office.

Of note, several government watchdogs, including the Public Affairs Research Council, supported Proposed Amendments # 1 and # 2.

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Copyright 2021 KALB. All rights reserved.


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