Governor Edwards has laid out tax reform proposals that include the elimination of the deduction for federal income taxes on individuals and corporations, the elimination of the one cent state sales tax increase imposed last year, and the extension of the sales tax to other services.
He also has proposed phasing out the corporate franchise tax over 10 years and implementing a new commercial activity tax on entities doing business in Louisiana. The governor says the new tax would generate an estimated $900 million.
The commercial activity tax proposal would exempt small businesses making less than $1.5 million per year. Edwards says that would exempt 389,000 of the 414,000 businesses in the state which would be assessed a flat tax of $250.00.
The governor says that under his plan, 90% of state income tax payers would pay less.
“The current tax and budgeting practices simply aren’t working for Louisiana and don’t provide a level playing field for both individuals and businesses,” Edwards said.
“This isn’t about raising taxes. It’s about modernizing a broken system in Louisiana, and I am hopeful that members of the legislature will come into this regular session with an open mind and willingness to work together to get the job done for the people we represent.”
The 60-day legislative session begins on April 10.
The Governor says his proposals will end Louisiana’s budget problems but it wasn't immediately clear how much revenue his overall plan would generate.