The new Gov. Jeff Landry Administration has talked about many different changes in state taxation and spending practices to kick-start the sickly Louisiana economy inherited from Governor John Bel Edwards.  Unfortunately, Revenue Secretary Richard Nelson, Landry’s chief advisor on tax reform issues, did not get the “Tax Reform” message that elected Governor Landry.

Secretary Nelson’s recent tax proposals are a disaster, increasing (not decreasing) taxes on the income of the working professionals and independent operators in Louisiana.

Nelson has inexplicably proposed increased state taxes through revocation of sales tax exemptions and taxation of professional fees.  These new taxes on professional income were not well received by Louisiana’s new reform legislature.

The reason that such a tax raise was summarily rejected is simple and obvious.  It is undisputed that Louisiana’s overall tax burden on our workers is almost 40% higher on personal income taxpayers in Louisiana than in the economically vibrant State of Florida.  Louisiana’s tax personal income tax burden also greatly exceeds the tax burden of the people of the other southern powerhouse States of Texas, Tennessee and South Carolina.

All the economically vibrant states in the south are fueling growth due to their repeal of personal income taxes.  Plain and simple.

In contrast, Secretary Nelson’s increased sales taxes on personal income is not a stimulus to our lethargic economy, but instead serves up more economic poison to Louisiana’s overtaxed productive sector.  Rightfully, Nelson’s increased sales tax proposal is “Dead on Arrival.”

The revitalization of the Louisiana economy is simple: immediate repeal of our personal income taxes and a substantial reduction in sales taxes.  The election of 2023 confirmed that Louisiana’s voters seek to repeal personal income taxes like Florida, Texas, Tennessee and South Carolina. Equally, Louisiana’s voters expect (or demand) the elimination of the 0.43% sales tax already scheduled to expire.  Louisiana’s new administration, and our new reform legislature, must keep their election promise of 2023 of full repeal of personal income taxes and real reduction of Louisiana’s sales taxes.

Louisiana’s taxpayers know what wonders would be born from such a pair of tax cuts in Louisiana.  Already, Representative Neil Riser has introduced the necessary legislation as Bill 844, in the 2024 regular legislative session to make this repeal.  And presently, Louisiana is scheduled to lower its sales taxes by 0.43% in July 2025.  These two tax reductions were widely discussed and supported by the vast majority of the voters who elected Governor Landry and our reform Legislature in the primary election of October 2023.

So let’s remind ourselves why the repeal of the personal income taxes with lower sales taxes is the best strategic plan to jump-start and then supercharge the Louisiana economy.  With Louisiana’s income tax rates presently tiered, most taxpayers will receive an immediate 3.5% to 4.25% pay raise with the repeal of personal income taxes.  That “pay raise through tax cut” will be modern manna from heaven.  Ultimately, these tax cuts will rightfully make Louisiana’s economy competitive across the thriving southern region of the U.S.  Simply, with these tax cuts, the United States’ financial experts will know Louisiana is ready to economically explode as the New Leader In The New South.

The only “excuse” for continuing Louisiana’s downward spiral is the “fear” by State government that State tax revenues will decrease.  A Fiscal Note that accompanied Neil Riser’s Bill 844 estimates that the State would lose approximately $4.70 billion in tax revenues each year.

However, this calculation is only a broad estimate and grossly incomplete.  We know that this revenue loss actually will not occur.

First, the Fiscal Note itself cautions that:  “The precise timing of likely revenue impacts is subject of significant uncertainty, . . . .”  Second, the Fiscal Note author ignores the exponential growth that the personal income tax cut will generate.  The Fiscal Note just assumes that the personal income earned by Louisiana’s workers previously taken by the State as a tax (i.e. the $4.7 billion annual revenue), will just disappear outside Louisiana’s economy like steam dissipating out of a Baton Rouge smoke stack.  In reality, that $4.70 billion will be reinvested in Louisiana every year by the taxpayers.

Economic history shows that after substantial tax cut, the affected economy will experience a super-charged expansion through multiple expenditures and investment of these retained earnings.  Four components of such a super-charged expansion of the economy are easy to identify:  (1) increased profitability of existing businesses when these retained tax funds are reinvested as working capital;  (2) increased personal wealth of the taxpayers who retain these tax funds; (3) increased population in response to Louisiana’s economic growth and competitiveness; and (4) increased sales tax revenues and property tax revenues that occur when the retained earnings are leveraged by the taxpayer to increase property purchases.  These economic multipliers will transform Louisiana into one of the new economic leaders in the southern region.

Fortunately, the Governor and the new Legislators have seventeen months to manage the State of Louisiana’s budget and activities, to welcome home this super-charged economic expansion.   It is now time for Governor Landry to enact these strategic tax cuts so Louisiana become the New Leader In The New South.