## An Introduction to Louisiana’s Tax Dilemma
For decades, Louisiana’s tax system has been under scrutiny. Attempts at reform often stumble upon the same obstacle: balancing the interests of winners and losers. When the potential losers voice their concerns, progress grinds to a halt. Meanwhile, Louisiana lags economically behind its Southern peers, leading to an exodus of native-born residents.
## A Call for Change
To combat these issues, Governor Jeff Landry has initiated a discussion [on tax reform](https://www.nola.com/tncms/asset/editorial/9bd232e6-94bb-11ef-8a9b-0feef0196a64/) during a special legislative session. Although we don’t agree with every aspect, it’s essential to support this crucial step towards economic growth.
## Unpacking Landry’s Proposal
There are multiple elements within Landry’s agenda, and not all of them resonate equally with us. The cornerstone of this plan involves extending a temporary [0.45% sales tax](https://www.nola.com/tncms/asset/editorial/c606209a-827d-11ef-b98a-97a3f931ce1b/). This is necessary to avoid an impending $450 million fiscal shortfall. We appreciate the pragmatic approach taken by the Republican governor to secure revenue.
### Flat Tax vs Tiered System
Landry proposes replacing the state’s tiered personal income tax — with a top rate of 4.25% — with a flat 3% rate. This change could disproportionately benefit the wealthiest residents. We believe a fairer system would require those most capable to contribute slightly more. However, a notable upside is the increase in the standard deduction, which assists lower-income earners.
### Sales Tax Adjustments
Landry considers broadening the sales tax to include services and digital purchases. While this could enhance revenue, taxing home repairs might negatively impact the residential construction sector.
## Re-evaluating Tax Exemptions
Tax exemptions are under scrutiny in Landry’s plans. For instance, we’ve never been fond of film tax credits that favour Hollywood over local industries. However, repealing historic restoration tax credits might undermine community revitalization in Louisiana.
### Education and Infrastructure
Several proposals in Landry’s 23-item agenda deserve attention. We support a [permanent pay rise for teachers](https://www.nola.com/tncms/asset/editorial/d83f9308-030d-11ef-bbe5-7fb7b1d1a195/), funded by reducing pension obligations. This saves millions in interest without risking the stability of the Teachers Retirement System of Louisiana. Furthermore, augmenting Louisiana’s [fortified roof program](https://www.nola.com/tncms/asset/editorial/afa57379-cd5c-57fd-9257-c7d63c10d537/) could reduce property insurance costs for some homeowners.
## Staying on Course
Juvenile justice and changes to the judiciary should not be rushed within this session. The governor’s tax overhaul involves significant constitutional shifts requiring voter approval in March. Therefore, we advise lawmakers to ensure any changes rely on this approval to avoid piecemeal reform and future fiscal uncertainties.
### The Urgent Need
The looming $450 million fiscal cliff underscores the urgency of extending temporary sales taxes beyond June 30. Addressing this pressing issue marks only the beginning of necessary tax reforms.
## Conclusion
Ultimately, we endorse an overdue conversation on tax reform. Though the session is only a starting point, it represents a critical step in addressing Louisiana’s economic challenges.
