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Louisiana Governor Jeff Landry speaks in the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, November 6, 2024, at the Louisiana State Capitol in Baton Rouge, La. (Hilary Scheinuk / The Advocate, Pool) STAFF PHOTO BY HILARY SCHEINUK Louisiana Governor Jeff Landry speaks in the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, November 6, 2024, at the Louisiana State Capitol in Baton Rouge, La. (Hilary Scheinuk / The Advocate, Pool) STAFF PHOTO BY HILARY SCHEINUK Louisiana Governor Jeff Landry speaks in the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, November 6, 2024, at the Louisiana State Capitol in Baton Rouge, La.
(Hilary Scheinuk / The Advocate, Pool) STAFF PHOTO BY HILARY SCHEINUK Louisiana Governor Jeff Landry holds a copy of ‘West's Louisiana Statutes 2024 Compact Edition #10 Revised Statutes Sections 47:1 To 50:end’ as he speaks in the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, November 6, 2024, at the Louisiana State Capitol in Baton Rouge, La. (Hilary Scheinuk / The Advocate, Pool) STAFF PHOTO BY HILARY SCHEINUK Louisiana Governor Jeff Landry speaks in the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, November 6, 2024, at the Louisiana State Capitol in Baton Rouge, La. (Hilary Scheinuk / The Advocate, Pool) STAFF PHOTO BY HILARY SCHEINUK Louisiana Governor Jeff Landry greets members of the legislature in the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, November 6, 2024, at the Louisiana State Capitol in Baton Rouge, La.
(Hilary Scheinuk / The Advocate, Pool) STAFF PHOTO BY HILARY SCHEINUK Louisiana Governor Jeff Landry, center, greets Rep. Polly Thomas, R-Metairie, left, and Rep. Michael Johnson, R-Pineville, right, as he enters the Louisiana House of Representatives on the opening day of a legislative special session, Wednesday, November 6, 2024, at the Louisiana State Capitol in Baton Rouge, La.
(Hilary Scheinuk / The Advocate, Pool) STAFF PHOTO BY HILARY SCHEINUK Facebook Twitter WhatsApp SMS Email Print Copy article link Save Gov. Jeff Landry told state lawmakers Wednesday that they can undertake historic change as he pitched his ambitious plan to rewrite Louisiana’s tax system. “I’m not here to pass the buck one more time for someone else to fix it,” he told House and Senate members as he opened a 19-day special session.
Landry is asking legislators to lower income tax rates, triple the standard deduction and jettison the corporate franchise tax in exchange for raising more money from sales taxes and eliminating several tax subsidy programs, including tax credits for film producers and investors in historic buildings. If passed in its entirety – which few expect – the state treasury would collect more in sales taxes and less in income taxes and, Landry has said, raise slightly more revenue for general government needs as the current system. “You have to look at these collectively, otherwise, it doesn’t work at all,” said state Rep.
Jack McFarland, R-Jonesboro, who chairs the budget-writing Appropriations Committee. The House voted Wednesday by a two-thirds majority to adjust its rules to allow the Ways and Means Committee to hear the tax bills Thursday morning rather than one day later under normal procedures. Rep.
Julie Emerson, R-Carencro, who chairs the committee, expects to have additional hearings on Friday, Sunday and Monday. Legislative leaders would like the full House on Tuesday to take up whatever emerges from committee, and the Senate would then receive the House-passed measures on Wednesday. The obstacles Landry must overcome three challenges to push through his package.
One is anti-tax fervor among Republicans, who hold two-thirds of the seats in the House and the Senate. Landry will need a two-thirds majority of legislators for any revenue-raising measures, so he’ll likely need the support of some Democrats to offset the “no” votes of some anti-tax Republicans. Another challenge will be the general apprehension of legislators to the sweeping changes.
They are already hearing from local government officials who fear the overhaul will leave them with less revenue and from constituents who don’t want to begin paying sales taxes on such activities as lawn care, dog grooming and digital streaming. Richard Nelson, the revenue secretary and architect of Landry’s plan, has quipped that everyone likes the proposal to require lobbyists to pay sales taxes on their work, except for lobbyists. A third challenge will be winning over state senators, who during the first two special sessions and the regular session earlier this year showed a willingness to buck the governor.
Senate President Cameron Henry, R-Metairie, has expressed concern about the lack of details from the Landry administration about the impact and costs of the governor’s plan. “I still don’t think there’s a consensus on what members are in favor of or are not in favor of,” Henry said. “There’s a consensus on getting something done.
What we’re able to accomplish will be determined by public testimony and members addressing the concerns of their local governments and the business community.” As legislators like to say, the tax package has a lot of moving parts, with at least 13 different bills to carry out what would be the biggest rewrite of Louisiana’s tax system since voters adopted the current state constitution in 1974. Rates and exemptions Political insiders are keeping their eye on several key issues.
One is the proposed rate of the individual income tax. Currently, those rates are 1.85% on income less than $12,500, 3.
5% on income between $12,500 and $50,000, and 4.25% for over $50,000. Landry is proposing to scrap the three-tier system in favor of a flat 3% rate.
But that rate depends on legislators raising revenue by eliminating dozens of sales tax exemptions, extending the sales tax to 41 activities that go untaxed now, renewing an expiring .45-cent sales tax (which would raise $450 million per year) and ending the tax subsidies for film producers ($145 million to $180 million), investors in historic buildings ($58 million) and investments in so-called enterprise zones. Landry is facing strong pressure from developers to drop his plan to end the historic building tax credit.
For every $100 million revenue-raiser that is dropped from the tax plan, the proposed income tax rate would have to .1% higher, unless revenue is found elsewhere. So if the package loses $200 million of proposed revenue, for example, the final income tax rate could go up by .
2% and end up at 3.2%. Another key issue is a proposal to impose a limit on how much future legislatures can spend.
The so-called expenditure limit has failed to win passage in recent years, with senators especially resistant to the idea of putting spending handcuffs on themselves. But Landry is backing a proposal by Sen. Bob Hensgens, R-Gueydan, that would restrict spending in future years when certain fiscal and population targets are met.
“We’ve proven in the past that we’re not capable of keeping spending under control,” Hensgens said. “This gives us a guideline. It has escape hatches if things go bad.
” Hensgens’ bill has the backing of state Rep. Brett Geymann, R-Lake Charles, a noted budget hawk, who said his support for the expenditure limit doesn’t mean he would necessarily vote for any of the governor’s revenue-raising measures. Other key issues are Landry’s effort to let parish governments opt out of the property tax on business inventory and his proposal to no longer allow local governments to impose taxes on prescription drugs.
The state already has a sales tax exemption for prescription drugs, so Landry and Nelson are following the advice of experts to unify the sales tax code in that aspect. But local government officials are worried about how they would make up the loss of $250 million per year in sales tax revenue from that proposed change. All or nothing? Handling the complicated sales tax bill is Rep.
Mark Wright of Covington, who chairs the Republican House Caucus. Wright voted against imposing the .45-cent sales tax in 2018 but said lawmakers have to renew it now to help pay for the income tax rate reductions and other benefits in the Landry package.
“You either get the whole or nothing,” he said. However, if the governor’s grand plan runs into trouble, legislators could simply eliminate the corporate franchise tax, which imposes a .275% tax on corporate assets.
Abolishing that tax would not leave legislators with less money next year, the Landry administration says, because the revenue from it has been flowing into a special savings account..
