Louisiana’s tax system takes a much-larger share from middle-and-low income residents than the wealthy just like most states, according to a national report released Wednesday.
The state did not make it into the Institute on Taxation and Economic Policy’s list of most regressive states when it comes to tax policy. The Washingtion D.C. institute describes itself as a nonprofit, nonpartisan research organization, which is funded by foundations and whose board primarily work for universities.
Gov. Bobby Jindal’s tax plan would put Louisiana in line with four of the 10 most regressive states that do not have income taxes and rely heavily on sales and excise taxes, according to a news release issued about the report.
Jindal wants to eliminate the state personal income and corporate taxes. Some of his aides have suggested that a bump in state sales tax, among other changes, could replace the lost revenues.
“Cutting the income tax and relying on sales taxes to make up the lost revenue is the surest way to make an already upside down tax system even more so,” said Matthew Gardner, executive director of the institute and an author of the 50-state study.
Jindal’s revenue department executive counsel, Tim Barfield, said Wednesday there is a difference in philosophy between the organization and what the administration is trying to do “to improve opportunities for the low-income and the poor.”
Barfield said the group favors increased taxation and redistribution of the resources to the poor and low-income. “Job creation and economic development are the key to improving the plight of the poor,” Barfield said, adding that “rebates” or “pre-bates” would help the poor.
Louisiana Budget Project Director Jan Moller said the new figures should serve as a warning to legislators as they consider legislation that could make Louisiana’s tax structure even more tilted against the poor. “Policymakers should be looking for ways to make Louisiana’s tax structure more fair, instead of raising taxes on the middle-class to finance tax cuts for the wealthy,” Moller said Wednesday.
The study showed Louisiana households earning less than $16,000 annually pay nearly 11 percent of their income in state and local taxes. Households earning up to $85,000 pay 10 percent. Meanwhile, households in the top 5 percent pay less than 5 percent of their incomes in taxes.
Currently, the bottom 20 percent of Louisiana households pay seven times as much of their income on sales taxes compared to the wealthiest households, the study found.