Last shot at tax reform dies
By Matt Houston / Manship School News Service
BATON ROUGE — State Reps. Barry Ivey, R-Baton Rouge, and Julie Stokes, R-Kenner, withdrew the 2017 Legislature’s last shot at major tax reform until 2019 during Saturday’s Senate Committee on Revenue and Fiscal Affairs meeting.
A collection of bills authored by the House seatmates would have instituted flat corporate income tax rate of 6.5 percent, and a flat individual income tax rate of 3.76 percent. It would have raised the standard deduction for single Louisianans to $12,500 and for married couples filing jointly to $25,000.
In turn, the bills would have eliminated many excess itemized deductions, and the permitting a deduction for federal income taxes paid.
Most committee members argued they could not support the remnants of a larger tax package without the rest of the bills that would have eliminated other exemptions and deductions that did not make it through the House. Stokes and Ivey saw much of their reform packages killed by the House.
“This massive reform that was supposed to happen this year has not happened,” state Sen. J.P. Morrell, D-New Orleans, said. “When you do partial reform, you run the danger of people saying ‘We already did reform; we shouldn’t do anymore.’ ”
The committee, and the bills’ authors, expressed visible frustration with the House’s inability to pass the entire package.
“When people decide to grow up and own up to their oath, we might be able to get something done,” state Sen. Karen Carter Peterson, D-New Orleans, said. “This is a continuation of the foolishness that’s happening on the other side.”
“The future of Louisiana really depends on ending this partisan, pointless tug-of-war,” Stokes said. “It’s hard to watch Louisiana fall on its face, which is what I believe you’re seeing at the moment.”
Louisiana is set to hit a billion-dollar plus revenue shortfall, being referred to as “the fiscal cliff,” starting July 2018, when temporary sales taxes expire.
“Piecemealing got us where we are,” state Sen. Gerald Boudreaux, D-Lafayette, said. “I’m ready to go off the cliff. If it means we start all over, then we start all over. Maybe we need to crash and burn.”
The only reform that made it out alive belonged to Stokes, and works to streamline state and local taxes, extending certain exemptions from the state level down to local, and vice versa, so that the state can better identify its revenue.
“This catches our sales tax up to being about 75 percent correct,” said Stokes, noting that one of her other bills would’ve streamlined it completely, but the House could not come to an agreement that would allow for its success.
That bill moved without objection. Boudreaux said he could support that bill and not the others because HB 673 only affects the “low-hanging fruit.”
“No one is more disappointed than me and my seatmate that we have solved no problems,” Ivey said. “I don’t think people understand the impact of doing nothing. We’re going to have to kick this until 2019, and the policy won’t be reflected until 2020.”