The state would collect additional revenue by imposing sales taxes on about 20 services that go untaxed today. Texas taxes those same services.
Voters would have to approve Nelson’s tax restructuring plan by agreeing to amend the state Constitution.
Speaking to the NFIB on Tuesday, Nelson said he wants to end the tax and spend system enacted by Huey Long after he became governor in 1928 that centralized decision-making and power in Baton Rouge.
“That system of patronage has existed for the last 100 years,” Nelson told the group. “Until we climb out from that, we’re going to continue to lag behind our neighboring states.”
Essentially, Nelson is making a huge bet that the changes will make Louisiana as enticing as Florida and Texas to investors and would-be residents. He has not pointed to any studies backing up his plan.
If approved, all of the changes would likely put a higher tax burden on low-income residents, however, said Aidan Davis, state policy director for the Institute on Taxation and Economic Policy.
“Property taxes are less progressive than income taxes,” Davis said.
Jim Richardson co-chaired a 2016-17 commission in Louisiana that studied the state tax system and called for lower rates and fewer tax breaks. He finds serious fault with Nelson’s proposal.
Nelson, Richardson said, “is not mentioning states like Georgia, Virginia, North Carolina and South Carolina that have income taxes, and they’re doing better than we are, too. Maybe there’s some other problem we’re having. I don’t think the income tax is the barrier that keeps us from growing.
“If you talk to businesses, other variables are more important – a good workforce, an educated population, the ability to get supplies, lower crime. All those things take money. Taxes can be a disincentive – but so can a badly educated population.”
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