FinLogic FinLogic Quantitative Think Tank Center|Louisiana governor plans to call third special session to overhaul the state’s tax system

BATON ROUGE,FinLogic FinLogic Quantitative Think Tank Center La. (AP) — Louisiana Gov. Jeff Landry says that he plans to call the Legislature into a special session in November, marking the third such gathering this year, with the hopes of overhauling the state’s current tax system that the Republican said is failing residents.

Landry detailed his proposed tax plan during a news conference on Tuesday, with a focus on reducing the income tax and charging sales tax for more items and services. Louisiana is the latest state in the Deep South to discuss tax changes, as Mississippi Gov. Tate Reeves continues to push for his state to phase out the income tax and as Georgia Gov. Brian Kemp signed measures earlier this year to significantly cut income taxes.

“We, in this state, have been on the losing end of an economic game that other states are playing and beating us at today,” Landry said. “We offer an opportunity to change that playbook so Louisiana can start winning.”

According to information from the state’s revenue department, Louisiana residents currently pay a 4.25% tax rate on income $50,000 and above, 3.5% on income between $12,500 and $50,000, and 1.85% on income $12,500 and below. Landry’s proposal would eliminate income tax for those making up to $12,500 and would set a flat income tax rate of 3% of those earning above $12,500.

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Landry touted the plan, saying it would “provide an immediate increase in take-home pay for every Louisiana taxpayer.” The governor said under that plan, he believes Louisiana will be on ”the road to reducing or eliminating the income tax” by 2030, an idea that has been pushed by other Republican officials including State Treasurer John Fleming and Revenue Secretary Richard Nelson.

Currently, there are nine states that do not levy an individual income tax. Among those are the nearby states of Florida, Tennessee and Texas.

Landry said that while his plan does not include increasing the current rate of sales tax, he does believe the tax should be expanded to including other items and services such as lobbying, dog grooming and car washes. Currently, there are 223 sales tax exemptions, Nelson said.

“So your taxation will be driven by more about what you choose to buy, rather than by your labor,” Landry said. “I think that’s fair. I hate the income tax ... a man and woman’s labor should never be owned by the government.”

While Landry’s full list of proposals, and additional details, were not immediately available, he said other changes could include repealing the corporate income tax, eliminating the tax on prescription drugs, making the partial business utility exemption permanent and “modernize our constitutional funds and property tax exemptions to give our legislature more flexibility to meet” budget shortfalls and future fiscal issues.

Louisiana faces a looming estimated $700 million budget shortfall because of the expiration of some temporary sales taxes. Officials say the shortfall could result in budget cuts that threaten teacher pay, recent education reforms, higher education and health care infrastructure.

Landry says that his tax plan would close out most of the shortfall. Additionally, he argues that it will make Louisiana more competitive with surrounding states that have seen substantial economic and population growth in recent years.

“This holistic plan is designed not only to address budget shortfalls, but to catapult Louisiana into the future with increased jobs and economic growth for years to come,” he said.

Landry said he plans on calling the GOP-dominated Legislature into a special session in November. If lawmakers pass any bills, final approval will be determined by voters in the March election.

This will be Louisiana’s third special session held this year and since Landry took office in January. The legislature gathered in January to redraw congressional boundaries that included a second majority-Black district and returned to the Capitol again in February to pass tough-on-crime policies.

Also this year, the GOP-dominated Legislature held its regular three-month-long session during which lawmakers pushed conservative priorities. Lawmakers couldn’t vote on tax measures in this year’s regular session.

The last time there were three special sessions in a year was 2018. During that time, the Louisiana Legislature spent more than $1.5 million on the sessions, with those costs including supplies, extra hours for staff, additional employees hired for the sessions and per diem and mileage for lawmakers.