Find out more about the proposed constutional amendments on Louisiana’s Nov. 13, 2021 ballot.
Amendment #1 – Streamlines sales tax collections
The gist: This amendment centralizes sales tax collections in Louisiana, establishing a state commission to process all sales tax receipts in the state.
A little background: Louisiana relies heavily on sales taxes, but its system for collecting those revenues is a bit complicated. Every parish and municipality have different sales taxes and agencies to collect them, on top of the standard 4.45% sales tax levied by the state. There are three sales tax collectors: Louisiana Department of Revenue for state sales tax, various local boards and commissions for local taxes and a statewide commission for online retail. Most states centralize sales tax collections.
Businesses would remit sales tax receipts to a centralized commission under the proposed change. The commission would then distribute the receipts back to local jurisdictions. In Lafayette’s case, Lafayette Parish School Board would continue to serve as the local collector.
This bill was passed with bipartisan support. There’s very little opposition across the political spectrum, outside of lobbies representing local taxing authorities.
Vote Yes: Streamlining sales tax collections is a good idea that will help Louisiana and its business community compete.
Vote No: The current system works just fine and local control over revenue streams is vital.
What the ballot says: Do you support an amendment to authorize the legislature to provide for the streamlined electronic filing, electronic remittance, and the collection of sales and use taxes levied within the state by the State and Local Streamlined Sales and Use Tax Commission and to provide for the funding, duties, and responsibilities of the commission?
Amendment #2 – Swaps the federal income tax deduction for lower income taxes on high earners
The gist: This is the most significant change to Louisiana’s tax code in decades. Boiled down, the amendment does essentially three things. It reduces tax deductions, reduces tax rates for people and businesses and creates a trigger for automatic tax cuts.
Three bills activated by the amendment do all the heavy lifting.
- Act 395 eliminates the federal income tax deduction and some other deductions for individuals, lowers personal income tax rates, dropping the highest rate from 6% to 4.25%, and installs an income tax cut trigger.
- Act 396 eliminates the federal income tax for corporations, lowers corporate tax rates and reduces the number of brackets
- Act 389 lowers corporate franchise taxes, which are levied on a company’s net worth, not its profits.
Revenue neutral. Legislators intended the swap to be revenue neutral, and for the most part it is. All told, the changes will reduce state revenues by $27 million. Most taxpayers would see small changes on their tax bills — some higher, some lower — and the amendment also caps personal income taxes at 4.75%.
Tax cut trigger. In short, Act 395 will automatically reduce personal income tax rates when the state’s economy is growing favorably and reserves are healthy. At no time in recent history has Louisiana’s economy met all three conditions required to activate the trigger.
Vote Yes: The amendment and companion legislation establish one of the lowest income taxes in the nation, make revenues more predictable for state government, reclaim $795 million lost each year to the federal income tax deduction, allat relatively little cost to government services. Much of what’s changed here aligns Louisiana’s tax code with its peers and should make its economy more competitive.
Vote No. This isn’t really reform. Louisiana’s tax code will continue to lean on sales tax income, which disproportionately burdens lower-income earners. Eliminating the federal tax deduction makes sense, but offsetting it with tax cuts for businesses and higher-income earners is unnecessary, considering public health and education programs remain underfunded. Lastly, this isn’t exactly revenue neutral. Louisiana must balance its budget, so even a $27 million reduction will mean service cuts.
What the ballot says: Do you support an amendment to lower the maximum allowable rate of individual income tax and to authorize the legislature to provide by law for a deduction for federal income taxes paid?
Amendment #3 ? Empowers some levee districts to levy taxes without voter approval
The gist: This amendment has virtually no effect on Lafayette voters. It impacts levee districts created between 2006 and this year.
Eight levee districts are impacted by this amendment. And Lafayette isn’t one of them. Levee districts created before 2006 can levy taxes up to 5-mills just by a vote of their board. Those created after 2006 need to call a general election. This amendment gives the same taxing power to the post-2006 but not those created after Oct. 9, 2021.
This is pretty much a local issue. Louisiana’s constitution is vast in its authority, which creates situations like this where voters across the state weigh in on issues that don’t affect them.
Vote Yes: Levee districts build, operate and maintain levee systems and need reliable ways to raise revenue. Flood control is an urgent issue.
Vote No: It doesn’t matter that other districts are treated differently. Taxes ought to be with a vote of the people.
What the ballot says: Do you support an amendment to allow levee districts created after January 1, 2006, and before October 9, 2021, whose electors approve the amendment to levy an annual tax not to exceed five mills for the purpose of constructing and maintaining levees, levee drainage, flood protection, and hurricane flood protection?
Amendment #4 ? Unlocks more dedicated money to fix budget shortfalls
The gist: This amendment allows the state government to tap 10% of most dedicated funds to patch gaps in budget shortfalls. Currently, that cap is 5%.
Fun fact: Louisiana has 393 dedicated funds, up from 78 in the late 1980s. Most state dollars are restricted to specific purposes. Very little – just $5 billion — of the state’s roughly $30 billion annual budget can be spent with flexibility.
Fund sweeps are one of the tools Baton Rouge has to shore up finances during budget crunches. Several funds can’t be swept, and this amendment won’t change that.
Vote Yes: Rampant dedications tie the government’s hands unnecessarily and create budget crises that don’t have to exist. More flexibility will help state officials respond to budget shortfalls more efficiently.
Vote No: Voters created dedicated revenues for a reason. State government should operate within guardrails those dedications established.
What the ballot says: Do you support an amendment to increase the amount of allowable deficit reductions to statutory dedications and constitutionally protected funds from five percent to ten percent?