State lawmakers will convene the day after the presidential election to consider Gov. Jeff Landry’s ambitious plan to overhaul Louisiana’s tax system. The 20-day special session begins Nov. 6 and must end no later than Nov. 25 — three days before Thanksgiving.
The for this special session includes 23 items. This will be Landry’s third special session since taking office in January.
As expected, most of the items deal with taxation.
The call largely reflects to lower Louisiana’s corporate income tax, abolish the corporate franchise tax, establish a flat 3% personal income tax rate, extend a temporary 0.45% state sales tax set to expire next June 30 and eliminate dozens of sales tax exemptions and tax credits.
Clancy DuBos
Photo by Chris Granger / The Times-Picayune
Landry also proposes a massive rewrite of the state constitution article dealing with revenue and finance. That would require a two-thirds vote in each legislative chamber plus voter approval in a statewide referendum next March.
In addition to all the tax cuts, Landry promises to give teachers a permanent pay raise.
How will he pay for all that?
Mostly by broadening the tax base, which makes great sense … on paper. As always, however, the devil is in the details.
For example, Landry wants lawmakers to extend state and local sales taxes to some 40 services and digital goods that are not currently taxed — and remove tax credits for things like filmmaking and historic redevelopment.
Among the purchases that Landry would subject to sales tax — which would add roughly 10% to their cost — are landscaping, quilting, digital streaming services, software, property repairs, janitorial services, pest control, pet care, photography, car washes and more.
The governor also wants lawmakers to delete an array of protected funds from the constitution so that lawmakers could divert revenues that currently go into those funds.
A decades-old knock against Louisiana is that our tax rates are high because our tax code is riddled with scores of special-interest exemptions, each with its own vocal constituency — and lobbyists to protect those interests.
All of which puts lawmakers in a pressure cooker of a session.
Supporters and critics of Landry’s plan have put forth studies showing why it will make things better … or not.
, a nonpartisan collaborative of business-friendly think tanks, recently released an analysis that generally supports Landry’s claims of tax cuts for just about everyone.
“The vast majority of Louisiana citizens will see a tax cut, almost all in double-digit percentages,” the RESET analysis concludes. It adds, “It appears that the income tax becomes modestly more progressive, and the sales tax becomes slightly less regressive as a result of the proposed changes.”
RESET has not yet weighed in on how Landry would pay for those cuts, but its leaders say they plan to publish an analysis of that and other aspects of the governor’s plan soon.
Meanwhile, Invest in Louisiana, a nonpartisan consumer-oriented think tank, has blasted Landry’s proposals as unfair to lower- and middle-income taxpayers.
“Our tax system right now is upside down,” said Jan Moller, the group's executive director. “Our overall tax burden ranks 43rd in the nation. But our personal income tax rates are low while our sales taxes — state and local combined — are the highest in the country. That’s unfair.”
Moller thinks Landry’s plan is “very complex, very far-reaching” and should not be rammed through the Legislature in a short special session. “The constitutional changes alone are overwhelming.”
In addition to overhauling the state’s tax code, Landry added his own version of an October Surprise by once again slipping into his call an item dealing with the state Supreme Court — a clear signal that he’s not done messing with Louisiana’s judicial branch.
Item 20 authorizes proposed constitutional amendments relating to “the Supreme Court's authority to regulate disciplinary proceedings and unethical practices … and related matters.”
What’s most devilish is that final phrase: “and related matters.” It could spawn a proposed restructuring of the state Supreme Court, which Landry has tried — and failed — to do several times already.
Even if Landry isn’t angling to take over the Supreme Court, why does he want to meddle with its role as the final arbiter of attorney and judicial misconduct — which is standard practice in all 50 states?
And that's just one of the 23 items.
When Landry’s legislative allies finish filing all his bills, there’s no telling what devilment will lurk in the details.