It’s almost official: Increasing income taxes, or at least changing tax rates, so more money flows into the state’s coffers will be the headline solution put forward by Gov. John Bel Edwards during a planned June special session to close whatever remains of Louisiana’s $600 million deficit.
Anyone remotely connected to the Edwards administration will, of course, deny this, declaring 1) every option is on the table, 2) no decisions have been made (including whether to even hold a special session) and 3) no proposals will be known until May 15 when a blue ribbon collection of economic and fiscal wonks delivers its “preliminary” recommendations on how to fix a state budget perpetually out of whack.
Edwards will ask legislators to make state income tax changes — either in a June special session or at a later legislative gathering should the governor back away from his plan to keep lawmakers in town following the close of the regular session.
We know this because Jim Richardson, the economist heading Edwards’ find-me-some-money task force, is strongly hinting that’s the best way to generate more revenue for next year and lay the foundation for a more systemic tax overhaul down the road.
Ball says a quick reading of the study Richardson’s task force performed last year uncovers a suggestion that Louisiana’s state income tax brackets be changed from 2, 4 and 6 percent to 1, 3 and 5 percent, but with some changes to deductions and exemptions – most prominently the itemized deductions and the ability to deduct federal income tax from state taxes.
The effect of which would be that people making $120,000 per year would see a tax increase.
The fact that most of Louisiana’s problem is we don’t have enough people making $120,000 per year and above in Louisiana, a condition that will surely worsen when the state commences punishing citizens who attain that level of income, has apparently not penetrated the skulls of Richardson and his braintrust. The fact that punishing capital in the middle of an economic recession, which Louisiana is in the middle of, would generally be seen as a big mistake hasn’t scored either.
Ball expresses doubt that an expressed tax income increase on Louisiana’s people which makes it less desirable for upper middle class folks to live here as opposed to Texas would gain much purchase with the legislature, and notes that there is already a mounting opposition to the idea Edwards has floated of calling a tax-raising special session as soon as the current session is over. If the Legislature is able to keep Edwards from getting that session until the fall, it’s entirely possible they might stop it from happening at all – at least in the estimation of some in the House, the state doesn’t really have a budget deficit of great size, or at least not of the size Edwards is projecting, and the current budget numbers are more like a ruse to induce panic and further tax increases which would give the governor a windfall he could spend on growing government.
And according to Ball, the professional and entrepreneurial classes who would comprise the majority of those making $120,000 per year and up are being targeted as the cash cow for that public sector expansion.
We will surely find out the answer soon.