Louisiana Budget Project: A stronger EITC can mitigate sales tax increase

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The Institute on Taxation and Economic Policy (ITEP) calculates that the poorest 40 percent of Louisiana households paid 10 percent of their family income in state and local taxes last year. The richest 1 percent of households paid only 4.2 percent of their total income in state and local taxes.
The main reason for this upside-down tax burden is sales taxes, as Louisiana’s combined (state and local) rate is the third-highest in the country. A sales tax increase would make the tax code even more unequal at a time when policymakers should be looking for ways to create a more fair system for struggling households.

The Institute on Taxation and Economic Policy (ITEP) calculates that the poorest 40 percent of Louisiana households paid 10 percent of their family income in state and local taxes last year. The richest 1 percent of households paid only 4.2 percent of their total income in state and local taxes.

The main reason for this upside-down tax burden is sales taxes, as Louisiana’s combined (state and local) rate is the third-highest in the country. A sales tax increase would make the tax code even more unequal at a time when policymakers should be looking for ways to create a more fair system for struggling households.

 

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