Revenue Department: La. residents to pay $400M more in taxes under ‘fiscal cliff’ deal

The highest-earning Louisiana residents will pay a total of roughly $400 million more as a result of federal tax increases included in the deal that averted the “fiscal cliff,” according to the state Department of Revenue. As reported by The Times-Picayune, the income tax increase—which will fall almost entirely on the state’s highest earners—will also lead to a $20 million decrease in state revenue, because those taxes can be deducted from state income returns. The analysis was conducted based on Internal Revenue Service data from 2010, the most recent set of data available. Ian Cruise, an economic policy analyst with the department, cautions that the data represents only an estimate of the deal’s impact and does not factor in the Dec. 31 expiration of a payroll tax holiday that will increase the amount taken out of most workers’ paychecks. Roughly three-quarters of the estimated increase will come from an increase in taxes on high-income earners, Cruise said. Individual income above $400,000 will now be subject to a tax of 39.6% instead of the previous top rate of 35%. Between 15,000 and 20,000 Louisiana residents fall into that category, Department of Revenue spokesman Doug Baker says. Caps on deductions for high-income earners, changes to the alternative minimum tax, and increases to the estate tax make up the remainder of the increase, he says. More details can be found in the full story here.