Louisiana lawmakers have cracked down on the multitude of tax exemptions, credits, deductions, and rebates that draw hundreds of millions of dollars from the treasury annually, with little success over the years.
Legislators need this money to lower corporate and income tax rates, simplifying the Byzantine tax structure of the state and making the state more attractive to businesses. The business lobbyists themselves, however, have created some formidable barriers to removing many of these tax breaks.
“Federal income tax deductibility” is perhaps the most vulnerable, and eliminating it has certainly become a key element of the comprehensive tax reshaping package.
The hiatus allows taxpayers to reduce their tax burden on the state by claiming deductions that they could apply on their federal returns. It is mainly used by our wealthier neighbors and awards approximately $ 1 billion in revenue that could otherwise be used to cover annual expenses.
A few years – like after Trump’s tax cuts in 2017, which reduced some federal tax deductions – benefit the treasury. In other years it costs the state a lot of money, which makes the state’s annual operating budget the same as what happens in Washington, DC
Farthest away is Senate Draft 159, which was sent to the House Ways & Means committee Thursday after passing the entire Senate by 36-3 votes on Tuesday.
A Senate revision of Louisiana’s income tax bill on Tuesday giving supporters hope that the master plan – the …
Two similar but not exactly the same measures were worked out from the House Ways & Means Committee and must now be reviewed in another House Committee before the entire lower chamber can take the floor for a vote.
Franklin Republican Senator Bret Allain, who led the tax reform as chairman of the Senate’s Revenue & Fiscal Affairs Committee, hopes to associate lower tax rates with the lifting of federal deductibility in the minds of voters.
Under Allains SB159, coupled with the accompanying legislation, most people would pay roughly the same amount of tax and the state would collect roughly the same amount of revenue.
Allain, who has the support of public order proponents from all political directions, wants to lower the maximum rate for individuals from 6% to 5% and for companies from 8% to 6%. Eliminating the state deductibility that only Louisiana and Alabama allow this way would pay for the lower rates, claims Allain.
But it’s in the state constitution and would require a two-thirds vote in each legislative chamber, as well as a majority vote in a statewide election on October 9, before federal deductibility could be removed.
“And that is exactly what this bill would do,” said Robert Scott, president of the Louisiana Public Affairs Research Council, a 70-year-old think tank on Baton Rouge politics. “It has to be removed from the constitution so that legislators have the flexibility to operate better tax policies.”
In 2016, the last time lawmakers tried to drive a stake through the heart of this particular tax break, at least for corporate income tax purposes, more than 1 million Louisiana voters said no way.
Former MP Julie Stokes, a veteran of past tax battles, suggests simply tuning federal deductibility up or down.
“I would take any other problem out of it,” said Stokes.
Since all tax measures affect everyone differently, adding other topics to the legislation means empowering those harmed by the changes. The federal government’s deductibility already has a base, albeit a comparatively small one, of taxpayers who pay less for it.
“If you play one group against another group, you lose,” added Stokes.
A complicated tax swap, backed by the legislature, took an important step on Monday when it received State House Way approval …
The professional accountant, Republican Stokes, was known during her four years at Louisiana House when she represented Kenner for creating massive spreadsheets to improve her approach to discussing the implications of some of the nuances suggested Change in tax law.
Stokes, who contracted breast cancer in 2017 and is now resolved, heads a new policy analysis group called Ellevate Louisiana. While the Louisiana Budget Project generally looks at financial problems from a liberal perspective, the Pelican Institute for Public Policy looks more conservatively, Stokes said Ellevate looks at problems from a woman’s perspective.
The federal tax deductibility appears to be the only tax break whose abolition has a role in legislation.
The chairman of the powerful House Ways & Means Committee, Stuart Bishop, R-Lafayette bowed to the opposition at his 100-page proposal to eliminate many tax breaks. The business community is on board to get rid of every single tax break that doesn’t affect them, but relentlessly against those who do.
“We have loans there that don’t make sense,” said Bishop. But he also acknowledged that his House Bill 444, which has not yet cleared the committee he chairs, “is the most controversial bill I have ever worked on”.