Louisiana lawmakers are considering a plan to eliminate the state income tax. Is this a good or bad thing? How will this effect the middle-class, elderly, students, and low-income residents in the state? According to reports, the house committee will be meeting on September 13, 2022, to discuss ways and a means to change the state tax code.

Dr. Tammy Johnston, an Economics Professor at the University of Louisiana Monroe, said of the idea, “People would only have to pay federal income tax, so that is kind of nice." How they plan to compensate for the budget shortfall is the million-dollar question. Dr. Johnston pointed out, “We are one of the lowest in the 50 states for property tax, so I would suspect that property tax would go up and gasoline tax.” She added. “That is another one that states increase, and we are currently one of the lowest.”

State Representative Michael Echols (R-14) is working with other lawmakers to follow in the footsteps of states who have eliminated the income tax like Texas. They have no income tax and Arkansas and Mississippi are considering ending state taxes now. Echols said, “It’s like if Walmart decides to reduce the price of a banana to fifty cents and your another competitor down the street charging a dollar,” He reasoned. “If I’m a consumer, I go where the taxes are least and the least impact, where I can buy more stuff.”

Still, Dr. Johnston warned if Louisiana lawmakers are looking at raising property and gas sales taxes as a means to balance the state's budget the move will disproportionately affect lower-income families. The Economics Professor explained, “The higher income people spend a lower percentage of income on expenditures, especially necessities, so sales tax is a heavier burden on lower-income as well as a gasoline tax.” This is the last thing lawmakers should want to do, especially with folks still struggling to get their lives in order after Hurricanes Laura, Delta and Ida.

Reprehensive Echols didn't deny the burden eliminating state taxes will put on the poorest Louisiana residents. However, he believes the hardship would only be for a limited time and things will even out in the end. Echols stated, “I know economists like to come up with different angles on why the poor will get hurt, but in this case, we have built in the current individual income tax system to mitigate any of the stress on the lower income earner.”

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