Know the Facts: Sales Taxes & Income Taxes

BATON ROUGE – With news outlets continuing to report on the Governor’s goal of eliminating personal and corporate income taxes, some comparisons have been made between the sales tax and the income tax, and what it means for individuals and the state. Here are some facts and figures to keep in mind:

1. Sales tax is a MORE STABLE form of revenue compared to the personal income tax. According to the Louisiana Revenue Estimating Conference (REC) and the Louisiana Department of Revenue (LDR), sales tax collections have historically been MORE STABLE than personal income tax collections.  (REC Historical Data; LDR Annual Reports). Additionally, according to R. Alison Felix, who authored “The Growth and Volatility of State Tax Revenue Sources in the Tenth District,” state sales taxes have proven to be a more stable source of revenue for year-to-year budgetary expenditures.”

2. Over a 30-year period, the nonpartisan Tax Foundation used 26 different economic studies to determine sales taxes were MORE BENEFICIAL for economic growth than both personal and corporate income tax. (Tax Foundation Special Report No. 207 December 18, 2012)

3. Eliminating personal income tax will create a business climate that encourages MORE BUSINESS INVESTMENT and MORE JOBS. According to the nonpartisan Tax Policy Center, America’s economy would steadily grow by “0.6 percent larger than otherwise after two years; 1.8 percent larger after ten years; and 3.6 percent larger in the very long run” if the nation switched to a tax system that relied on sales tax, not income tax. (Tax Policy Center) 

4. Sales tax grows with the economy. When compared to other sources of revenue, sales tax is relatively stable during economic downturns resulting in more revenue as the need arises. 

5. Governor Jindal’s proposal will KEEP the Constitutional protections for the exemptions of food for home consumption, prescription medicine, and residential utilities. These exemptions result in the average individual or family with income under $30,000 per year having almost half of their annual purchases exempt from state sales tax. These progressive provisions lessen the impact of the sales tax on lower income individuals and families.

6. In order to offset unfair impacts to low income groups, Governor Jindal’s proposal will set aside funding to operate an Earned Income Tax Credit or a similar mechanism. 


LDR accepting resubmission of 2010 filing extensions through August 15, 2011

BATON ROUGE – August 15, 2011, is the deadline for all filing extension requests related to 2010 Louisiana individual income tax and 2010 Louisiana Corporation Income and Franchise tax returns that were returned due to the failure to include a Louisiana tax account number.

LDR requires a Louisiana tax account number on all paper filing extensions submitted via state form CIFT-620EXT or IRS Form 7004.  Extensions cannot be processed without the account numbers. 

LDR will waive delinquent filing penalties for 2010 filing extension resubmissions that meet the August 15 deadline.  Those that fail to meet the deadline will be subject to delinquent filing penalties.

The resubmission should include only the extension request, not the full tax return.


‘Bill would halt state income taxes’

The Advocate reports that house and senate committees in the Louisiana legislature advanced bills that would repeal the state’s corporate and individual income taxes:

Three bills advanced:

n House Bill 633 by state Rep. Hunter Greene to repeal the state corporate income tax beginning Jan. 1. The bill would reduce state revenue by $81 million the first year.

n House Bill 634, also by Greene, to repeal the state personal income tax beginning Jan. 1. The bill would reduce state revenue by $3 billion the first year of the repeal.

n Senate Bill 259 by state Sen. Rob Marionneaux to phase out the state personal and corporate income taxes by Jan. 1, 2015.

Greg Albrecht, chief economist for the Legislative Fiscal Office, said HB633 and HB634 would eliminate half of the state general fund.

Health care and higher education rely heavily on the state general fund. “It would be quite a challenge,” Albrecht said.

Other states have an increased reliance on property and sales taxes rather than being dependent on income taxes, Albrecht said.


Louisiana state income tax filing deadline is May 17

BATON ROUGE – Louisiana’s individual state income tax filing deadline is Monday, May 17.

The fastest, easiest way to file state income taxes is through Louisiana File Online, the free web application from the Louisiana Department of Revenue.

With Louisiana File Online, taxpayers can manage many different aspects of their accounts, including:

  • Filing returns online
  • Paying taxes electronically
  • Checking the status of a refund
  • Amending prior-year returns
  • Uploading supporting materials, such as receipts and other scanned documents
  • Requesting a filing extension

Anyone needing a filing extension for returns due on May 17 must submit their requests on or before the due date. 

Copies of federal filing extensions filed with the IRS are also acceptable. Mail copies to:

    Return Extension
    Louisiana Department of Revenue
    P.O. Box 751
    Baton Rouge, LA 70821


Filing extensions must be requested before filing deadline

Individuals requesting filing extensions for state income tax returns due on May 17, 2010, must submit their requests on or before the due date.  Individual taxpayers can request filing extensions through Louisiana File Online at

Corporations requesting filing extensions for Corporation Income and Franchise tax returns due on April 15, 2010, must submit their requests on or before the due date.

Bulk filing extensions are available and can be submitted electronically.  Tax preparers using the bulk electronic filing extension option must have an Electronic Filing Identification Number (EFIN) or a current Louisiana Revenue Account Number registered with the Louisiana Department of Revenue.

Copies of federal filing extensions filed with the IRS are also acceptable if filed by the due date of the return.  Mail copies to:

    Return Extension

    Louisiana Department of Revenue

    P.O. Box 751

    Baton Rouge, LA 70821


Louisiana File Online – Fast! Easy! Absolutely Free!


Report: States saw significant revenue decline in first quarter

A report from the Nelson A. Rockefeller Institute on Government says states experienced “widespread and sharp declines”  in tax revenue in the first quarter of 2009.

From the highlights:

  • Total state tax revenue fell by 12.6 percent in the first quarter of 2009, compared to the same quarter a year earlier, based on data for 47 early-reporting states. Forty-five of these states had declines in total tax collections.
  • Personal income tax revenue fell sharply and represented the bulk of the decline, with a 15.8 percent year-over-year decrease. This is the largest such decline since 2002.
  •  Sales tax collections continued their fall with a decline of 7.6 percent, while corporate tax collections dropped 16.2 percent. This is the second quarter in a row that revenue from all three major sources declined.
  •  Many states are already reporting even further revenue shortfalls in the second quarter of 2009 on personal income tax returns due in April.
  •  The employment picture for the quarter was sharply and broadly negative. The number of jobs fell in every one of the 50 states, and most showed declines of more than 1 percent compared to the previous quarter.

Read the full report (.pdf) here.


Editorial: 'Stretch funds for campuses'

An editorial in the Baton Rouge Advocate urges lawmakers to delay implementation of the expansion of an income tax deduction. The paper’s opinion staff says the state needs the revenue can relieve budget pressure on Louisiana’s institutions of higher learning.

The Baton Rouge Area Chamber is hardly alone in looking down the road and seeing potentially harder times for state colleges and universities. But the chamber deserves credit for tackling the politically sensitive issue head-on, calling for a delay in a scheduled tax cut for three years while the impact of revenue declines can be assessed.

We need more common-sense leadership in this crisis than we’ve been getting from elected officials, from Gov. Bobby Jindal on down. Endless bleating that delaying a tax cut amounts to a tax increase is not only transparently false but ignores the obvious: Legislators phased in the tax cut, and it should properly be reassessed in light of the decline in state revenue.

The chamber’s program for the future includes not only a tough-minded approach to recurring revenue but greater authority for colleges to raise tuition and fees without periodically crawling to the State Capitol for a two-thirds vote of the Legislature.

Read more.


Adopted Rule – Income Tax Withholding Tables


Under the authority of R.S. 47:32, R.S. 47:112, R.S. 47:295, and R.S. 47:1511 and in accordance with the provisions of the Administrative Procedure Act, R.S. 49:950 et seq., the Department of Revenue, Policy Services Division, amends LAC 61:I.1501 relative to individual income tax withholding tables based on the income tax rates as provided by Act 396 of the 2008 Regular Session of the Louisiana Legislature. Act 396 amended R.S. 47:32 to reduce state income tax rates in the two highest income brackets for tax years beginning on or after January 1, 2009. Act 396 provided that the revised withholding tables will not become effective until after July 1, 2009.

Read LAC 61:I.1501: Income Tax Withholding Tables.


Correction made to minor errors in withholding formula.


Report: 'House bloc to reject bill delaying tax break to offset higher education cuts'

The Associated Press reports that a coalition of Republican and Democratic state lawmakers has united in opposition to a measure that would delay implementation of a scheduled state income tax reduction.

Forty-seven House members, enough to block a veto override, have promised to vote against a Senate proposal to reduce higher education funding cuts by delaying a tax break.

The mostly Republican bloc signed onto a news release, promising “No” votes against the proposal from Sen. Lydia Jackson to postpone by three years a tax break the Legislature approved in 2007. Others promising to vote against it include Independent Rep. Joel Robideaux and Democratic Reps. Taylor Barras, Simone Champagne, Bill Chandler, Noble Ellington and Bernard LeBas.

Jackson’s bill would delay from this year to 2012 a scheduled increase in the number of allowable income tax deductions for individual taxpayers.