NEW ORLEANS (AP) — Louisiana Gov. Jeff Landry celebrated a political win Thursday as he signed into law sweeping tax measures passed by lawmakers that include reducing the individual income tax to 3%, cutting corporate taxes and raising the state sales tax. He also approved an array of proposed constitutional changes to go before voters in March.
“Y’all have instituted generational change,” Landry said of a bipartisan group of lawmakers standing beside him at the Capitol in Baton Rouge. “They opened the door for a new era here in Louisiana, an era where every working citizen in this state gets to keep more of their hard-earned money.”
Landry, a Republican, said the measures will provide $1.3 billion in income tax cuts for Louisiana residents as well as nearly triple the standard individual deduction and double deductions for seniors. The income tax rate was 4.25% for people earning $50,000 or more. Republicans said the measures will help stanch outward migration from the state.
To pay for the bulk of the tax cuts, Landry approved increasing the state sales tax to 5% for the next five years, after which it will drop to 4.75%. It previously stood at 4% with a temporary 0.45% increase set to expire next year.
Landry also agreed to redirect $280 million in vehicle sales tax funds earmarked for several major infrastructure projects to help pay for the tax cuts over the next two years.
Landry said other changes would make the state more competitive for businesses. Large corporations will have their income tax rate reduced from 7.5% to 5.5%. Louisiana also eliminated the 0.275% corporate franchise tax. Republicans had long decried the levy on businesses operating in the state worth more than $500 million in annual revenue as hindering economic growth.
“Our complicated business tax policy has been finally moved more towards fairness and put us in a place to be more competitive with our surrounding states,” said Republican Rep. Julie Emerson, who sponsored several major bills signed by Landry.
Economic Development Secretary Susan Bourgeois said the corporate tax cuts sends business a message: “We are here to compete, we do compete, and we want you."
Landry and his allies in the GOP-controlled legislature had championed the tax reform package in an intense three-week special session in November, the third such session since he took office in January.
While Democratic lawmakers overwhelmingly passed the tax package in the Senate, some Democrats in the House of Representatives warned the tax cuts would mostly benefit the wealthiest residents and corporate shareholders.
Critics pointed out that increasing the state sales tax disproportionately affects lower-income households. Louisiana has the highest combined state and average local sales tax in the country, according to the Tax Policy Foundation.
The tax measures included an array of proposed constitutional changes intended to streamline a complicated section of the state's constitution. The changes include liquidating several education trust funds to pay off approximately $2 billion in school district debt and using the savings to make permanent a $2,000 pay raise for teachers. Another constitutional change would include a growth cap designed to limit the amount of additional funding the state could earmark for recurring expenses each year.
Landry also signed other proposed constitutional amendments unrelated to taxes.
One would make it easier for lawmakers to expand the number of crimes for which minors can be tried and sentenced in adult courts by removing constitutional restrictions. Republican lawmakers and prosecutors say the change will increase public safety by paving the way for longer prison sentences for teenagers who commit violent crimes. Democrats and criminal justice reform advocacy groups have warned it would undermine rehabilitative efforts and fails to address the root causes of juvenile crime.
"If you care about kids, you want to vote yes” on the amendment, Landry said.
Another proposed amendment would allow the legislature to create specialty courts. Republican lawmakers said the bill would give more flexibility to the justice system, such as by enabling the creation of regional drug courts to serve rural parishes that could not afford their own. Some Democratic lawmakers have expressed concern that the broad language of the amendment could allow for Republicans to exercise more control over the criminal justice system in Democrat-dominated jurisdictions such as New Orleans.
The constitutional amendments are scheduled to go before voters on March 29.
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Brook is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Brook on the social platform X: @jack_brook96