Groups offer tax reform ideas ahead of legislative session

BATON ROUGE, LA (WAFB) - With tax reform on the agenda in the upcoming state legislative session, various groups and organizations are sounding off about how to make the state's income more predictable.

Yearly budget shortfalls have become a part of life in Louisiana, leaving programs such as higher education and healthcare repeatedly on the chopping block.

"The thing that's been most predictable about our tax system is that it has been inadequate," said Nick Albares, senior policy analyst with the Louisiana Budget Project (LPB).

LBP was one of the many groups that released a report outlining suggestions on how to improve the state's tax code. One suggestion was eliminating the rule allowing Louisiana taxpayers to deduct how much they pay in federal taxes on their state return – a policy that largely benefits upper income earners. Albares said that tax break puts state government at the mercy of Washington lawmakers.

"If federal income taxes go up, the state gets less revenue. If federal income taxes go down, then the state gets more revenue," Albares said.

Another suggestion is reforming the sales tax and reducing it by a penny – from five cents to four cents.

"We've got a sales tax system with a rate that's the highest in the nation," said Robert Travis Scott, the president of the Public Affairs Research Council of Louisiana.

Scott was a member of The Task Force on Structural Changes in Budget and Tax Policy, which was created by the legislature and recently released a report outlining ideas for how to modify the tax code in the upcoming session.

Scott argued that the sales tax, riddled with exemptions, made things confusing for businesses and even more confusing for those projecting how much money the state will bring in. That opens the door for shortfalls.

"We keep changing the rules of what's in there," Scott said.

Albares's report also calls for reducing the sales tax. He argued that it's a regressive tax, putting a larger burden on lower income earners than those with disposable income.

However, the question remains as to whether lawmakers will go along with the suggestions. In 2018, many of the temporary fixes lawmakers installed last year to deal with the multi-billion dollar shortfall will expire, meaning the state will faces yet another billion dollar fiscal cliff if legislators do not take action.

"I think it does takes courage to make changes, but I think that's what the moment demands," Albares said.

Legislators return to Baton Rouge for the session in April.

Copyright 2017 WAFB. All rights reserved.