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How Much Would A Ten-Year Phase-Out Of State Income Taxes Cost La.?

As La. Republicans and Democrats continue to discuss whether to get rid of the state income tax, just how much would it cost to make that happen, if it were phased-out over a ten-year period, like La. Gov. Bobby Jindal wants?

Rep. Hunter Greene
Rep. Hunter Greene
Chuck Kleckley, facebook
Chuck Kleckley, facebook

Nearly $24 Billion. That’s according to the La. Legislative Fiscal Office. Their report is in response to Republican Representative Hunter Greene’s bill, which would lower income tax rates by 10% a year, starting in 2014. That’s a starting time that La. House Speaker Chuck Kleckley, who endorses a ten-year income tax phase-out, disagrees with – he wants to delay starting it for at least two years.

The report also points out La. would lose $78-million in revenue that first year. The Bayou State currently brings in a little over $2.5 Billion in revenue from income taxes. Kleckley says something has to replace that lost revenue, perhaps higher tobacco taxes or eliminating certain tax exemptions.

Jim Richardson (Photo by lsu.edu)
Jim Richardson (Photo by lsu.edu)

Jim Richardson, an LSU economist, adds that eliminating the personal income tax without a way to offset the revenue loss would create budget problems for the state. La. Department of Revenue Secretary Tim Barfield, the man who was tasked as Gov. Jindal’s point man on his now scrapped tax reform plan, did go on the record before the Senate Revenue and Fiscal Affairs Committee on Tuesday and say that a phase out income tax proposal doesn’t have to be revenue neutral, though “I think that would be the ultimate desire,” says Barfield.

Richardson also believes that our income tax may not be the stumbling block it’s been made out to be because of the successful recruitment of companies to our state. He also points out the lack of an income tax in Texas and Florida is not the sole reason they have excelled. In fact, they have a larger per person tax burden than we have in Louisiana, according to this article.

The House Ways & Means Committee will begin hearing proposed income tax phase-out bills next week.

Coverage of Income Tax Debate

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