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New state tax overhaul raises questions about costs
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BATON ROUGE - A new tax system is coming to Louisiana at the start of the New Year, but there are questions about whether it will actually save folks money after a flat rate was set for income tax, but a temporary sales tax hike was added.
Lawmakers set the income tax in Louisiana at a flat three percent, but that came with a trade-off. State sales tax will go up from 4.45% to five percent for five years. According to Rep. Roger Wilder, R-Denham Springs, if a Louisiana resident makes a $45,000 salary, the current tax plan would cost $1,286. The new plan lowers that rate to $975.
Rep. Wilder and Rep. C. Denise Marcelle, D-Baton Rouge, are on opposite sides of the aisle. She says that the changes could ultimately cost residents more when combined with other factors.
"There was a lot of moving parts, and we ended up with a full penny, instead of going down or going away,” Marcelle said. “Now we're at a full penny, which makes us one of the highest taxed places there is."
Wilder argues that consumers can choose what they purchase and that alone does not mean an increase. He says the tax overhaul is a sign that Louisiana could push businesses further.
"You have your income tax, and you have what you're going to be taxed when you buy things,” Wilder said. “The income tax is a man's labor. The other is all choice purchases."
Marcelle says it’s important to consider city sales taxes in combination with state taxes, and she argues paying those together could add up to a higher price.
"Certainly if you're going to go out and buy a car, I would advise you to buy it before this new tax hits, because you're going to pay," she said.
“I think in the state sense, we're going to take a few steps back with people being worried about this, but the numbers don't lie,” Wilder said.
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