earned income between 0-25K 2%
earned income between 25K-100K 4%
earned income over 100K 6%
Currently the state charges a 4% tax it would rise to 5.88 (+1.8%).
OK, so the worst case scenario for people in each bracket (assuming they spent all their income on taxable items):
$10,000: Now pays $200 income tax, would pay $180 in additional sales tax--saves $20
$25,000: Now pays $500 income tax, would pay $450 in additional sales tax--saves $50
$100,000: Now pays $3,500 income tax, would pay $1,800 in additional sales tax--saves $1,700
$500,000: Now pays $27,500 income tax, would pay $9,000 in additional sales tax--saves $18,500
Combined revenues to the state from all of these people:
Now collecting $31,700 in income tax
Would collect an additional $11,430 in sales tax
(obviously the percentage of revenue lost would not be this big because there are a lot more people who would be paying $20 or $50 less than people who would be paying $18,500 less, but still revenue is lost)
And remember, this is the worst case scenario for all of these taxpayers, meaning the best case scenario for the state in terms of collecting taxes. How would the state recoup those lost revenues? Isn't the state already having major budget shortage problems? How would this help? How much more in cuts can LSU take? How much less can we get away with spending on highways? Law enforcement? Elementary and secondary education? Is all of this lost revenue going to be made up with higher property taxes? Wouldn't that disproportionately hit people who own property but don't have much income (probably a lot of retirees on fixed incomes who have their houses, etc. paid for)?
This post was edited on 3/20 at 12:32 pm