Taxes up, taxes down for Louisiana workers feeling financial whiplash

Updated: Feb. 27, 2018 at 4:12 PM CST
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SHREVEPORT, LA (KSLA) - By now, many of you have likely noticed a change in the amount of money deducted from your paycheck. It's all connected to the federal tax break approved by Congress two months ago.

For Louisiana workers, it's been a sort of financial whiplash. First came the federal tax break approved by Congress back in December.

But because of that tax drop by mid-February a take hike went into effect in Louisiana. For many, it may seem a bit like taking two steps forward financially only to take one step backward.

"It don't need to go up anymore. We're not Texas. We're not Chicago. We're not the big cities," said local taxpayer Arrie Butler.

She's not alone. We heard the same sentiment from others. And it turns out the state tax hike is an unintended consequence of trying to lower the tax burden, not increase it if federal taxes went up.

"Once they increase the taxes, that you would pay less in Louisiana income tax. So there's a flip side to it, as well," said Trent Millican, a certified public accountant in Shreveport.

That meant this month people working in Louisiana began noticing a difference in the amount of money withheld from their paychecks.

But Millican said there is a silver lining of sorts.

"Net overall there's still going to be more money in your pocket because the Louisiana income tax is much less than the federal rate."

For example, if you save a thousand dollars from your federal tax return, then check your tax rate is for Louisiana. So if that's 6 percent, multiply 1,000 times 6 percent. When you do the math it comes to an extra 60-dollars owed on your state tax return.

But others described paying taxes as the bargain we make to enjoy so many government services.

That includes Sarah Shoup with the non-profit group Common Ground Shreveport — a community and outreach service in the Cedar Grove Neighborhood.

"We're all part of the community," Shoup said. "If we want governmental services of any kind we're all going to have to pay into that."

And since this tax adjustment is part of the state constitution, it needed no approval by the governor or legislature before it kicked in.

One bright spot — Louisiana remains one of just 6 states where you can deduct your federal tax payment from your state return.

Plus, the tax hike in Louisiana could generate an estimated several hundred million dollars into the state budget, that's teetering on the edge of that so-called fiscal cliff.

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