The tax overhaul that was passed last fall has now been a part of our lives for more than a half a year. Has it had an effect on our overall financial health? A new study commissioned by RESET Louisiana says for the vast majority, it’s made an improvement. Barry Erwin, the president and CEO of Leaders for a Better Louisiana, says the cut in income tax to a flat 3% has more than offset the slight increase in sales tax.
“Those decreases in income tax are slightly more than the increases in sales tax. So that’s why, overall, people get basically a small tax cut,” Erwin explained.
Erwin says the state’s long-term goal is to eliminate the income tax altogether to help Louisiana compete with other southern states that have no income tax like Texas, Tennessee or Florida. He says short of that, a flat 3% income tax is still pretty good.
“We think that will bring benefits to the state in terms of more investment, more economic development, hopefully more people coming into the state being attracted by the fact that we have a very low income tax,” Erwin said.
Erwin says for most people, their combined tax burden will decrease by double digits.
“The vast majority of people are going to see a pretty significant cut in their taxes overall. In a range from 15% up to maybe 25%, even a little bit higher,” Erwin noted.
RESET Louisiana is a collaboration between Better Louisiana and the Public Affairs Research Council of Louisiana.
