Report: La. among states taxing income of working poor

Louisiana remains one of the few states that levy an income tax on working families living in poverty, and it’s keeping many such families from working their way into the middle class. That’s the gist of a new report on state income tax trends in 2011, out today from the Center on Budget and Policy Priorities. The report says Louisiana is one of just 10 states collecting income taxes from families of three or more under the poverty threshold ($17,922), and one of only 15 states taxing families of four or more below the poverty line ($23,018). Louisiana taxes all income above $16,800 for a family of three, and above $21,300 for a family of four. Louisiana Budget Project Director Jan Moller says the state should—at the very least—expand its version of the federal Earned Income Tax Credit to help reduce the tax burden on the working poor. “Not only would reducing income taxes for Louisiana’s working poor encourage work and reduce poverty, it’s also the right thing to do for our families and our economy,” Moller says. Taxing the incomes of working-poor families runs contrary to years of bipartisan efforts at both the federal and state levels to help poor families work their way into the middle class, the report says. “Exempting working-poor families from state income taxes is good for Louisiana’s economic future,” says Phil Oliff, co-author of the report and policy analyst at the Washington, D.C.-based research center that conducted it. Dig into the full report here.