Legislature begins tax session
BATON ROUGE — Gov. Jeff Landry launched his ambitious tax plan Wednesday in a speech before a legislative special session and called for revamping the state tax code, positioning it as the largest tax cut in Louisiana history.
At the heart of Landry’s plan is a call for slashing the personal income tax to a flat 3 percent rate and making the temporary 0.45 percent state sales tax permanent. Ultimately the governor’s goal is to pave the way for the elimination of the income tax in its entirety.
The proposal also includes significant changes to the corporate tax structure, including the elimination of the corporate franchise tax and a reduction of the corporate income tax rate. Landry described the franchise tax as a burden on Louisiana’s economy that discourages companies from setting up shop in the state.
Landry aims to offset these reductions by broadening the sales tax base and reducing special-interest tax breaks. He says these changes will help fix Louisiana’s negative population growth and encourage businesses and families to stay in the state.
“If we do not act, studies show that one in four children will leave our state for better opportunities,” he said. “The time for piecemealing, stalling and kicking the can down the road is over,” Landry told lawmakers.
Beyond income and corporate tax reductions, Landry’s plan includes eliminating the sales tax on prescription drugs and more than doubling the income tax deduction for seniors.
He also proposed finding money for permanent pay raises for teachers by tapping into a $2 billion fund to pay down debts from a teacher retirement program.
The governor framed these reductions as essential investments in Louisiana’s future, suggesting that this relief for seniors and teachers would allow the state to retain talent and improve quality of life.
“Cutting our personal income tax by 30 percent will trumpet a new day in Louisiana,” he said. “We will effectively eliminate the income tax for the working poor, putting us on a path for eliminating the income tax once and for all,” Landry said.
To offset those tax cuts, at least in part, Landry wants lawmakers to abolish tax credits and exemptions that currently cost the state $300 million. Ending those exemptions would mean taxing for the first time several dozen services and digital items such as streaming services that currently are tax-free.
Landry said that if the Legislature does not accept his tax plan in full, then residents will be “stranded halfway across the river.” He said every aspect of his plan must coincide with other parts of the proposal to achieve the kind of change that Louisianians need.
State legislators are privately expressing concern that they will not have enough time or information to make the changes that Landry wants without causing more problems than they solve.
Landry and Revenue Secretary Richard Nelson have been holding private meetings with various lawmakers and making public presentations to try to sell the plan.
Alan Boxberger, the legislative fiscal officer, told lawmakers his office does not have the time to properly analyze the financial impact of the proposed tax changes on local government revenue in the time frame given, according to the Louisiana Illuminator.
”Landry's trying to make both the largest changes to our tax system that we've seen in 50 years and the largest changes to our Constitution that we've seen in more than 50 years, and he wants to do this in essentially two weeks.” Jan Moller, the executive director of Invest in Louisiana, said in an interview on Audacy.
While there have been some criticisms, Landry has received support from several Republican state representatives thus far, including Rep. Jay Gallé of Mandeville, who expressed optimism about the effort.
"The corporate side of the package is good," Gallé said, adding, "I hope for success. By lowering it during this session, we are setting up for the complete elimination of personal income tax."
Landry has also gained broad support from small business owners, teachers, military veterans, pharmacists and others. Representatives of each group were invited by Landry to attend the session on Wednesday.
In the chamber, Landry acknowledged his guests in the balcony including Kimberly Wixson, a pharmacist with the Louisiana Pharmacists Association who is currently battling cancer. Landry’s proposal to expand the sales tax exemption on prescription drugs resonated deeply with Wixson.
“We are the only state to tax prescription drugs. How insane is it that we make people pay for being ill, and in a tax?” Wixson asked.
The House Ways and Means Committee, which initiates tax measures, could begin meeting Thursday to begin hearing bills.
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