Tax compromise dies
By Matt Houston / Manship School News Service
BATON ROUGE — The House Ways and Means Committee Tuesday killed a tax package 11-7 that would have eliminated the deduction for federal income taxes paid, but in a trade lowered the individual and corporate income taxes by 1 percent each.
State economics expert Jim Richardson of Louisiana State University said House Bill 258 would have made Louisiana’s tax revenue more predictable by divorcing state taxes from federal taxes.
“The federal government can change something modestly that has a dramatic impact on us, even though we might not notice it for six months,” Richardson said. “This takes out one more factor that we have to predict as a state.”
HB258 originated with Gov. John Bel Edwards but formally sponsored by state Rep. Rob Shadoin, R-Ruston, would have lowered individual income tax rates to 1, 3 and 5 percent levels and corporate income tax rates to 3, 5 and 7 percent levels.
It was part of a package of tax reform bills brought by Shadoin. An amendment tied together the four administration bills, so when HB258 went down the entire package died.
The current iteration of the package, overall, would have raise about $21 million in revenue and decreased individual income taxes for 90 percent of Louisianans, according to Richardson.
Shadoin argued the change is “about as revenue neutral as possible in a $9 billion state budget.”
However, several Republicans expressed concern the package was dependent on other legislation to have a positive impact on the state’s budget.
State Rep. Chris Broadwater, R-Hammond, joked that “only bits and pieces of bodies” come out of the committee — referring to bodies of work.
State Rep. Barry Ivey, R-Baton Rouge, noted his tax package, which included switching to a flat tax and which was favorably reported out of committee Monday, incorporates a flat tax and addresses a broader base, unlike the bracketed structure of Shadoin’s plan.
“I brought my bill this year because I didn’t want to be the guy to say ‘I can’t support this’ and not have an alternative,” joked Ivey. “The difference between this and my bill is that mine is better.”
Shadoin’s tax package would have required a constitutional amendment to remove the deduction for federal income taxes paid. State Rep. Alan Seabaugh, R-Shreveport, argued the people already spoke on the issue when they defeated a similar constitutional change — in that instance, eliminating corporate federal income deductions from being declared on state tax returns.
The bracket distribution garnered debate as well. State Rep. Julie Stokes, R-Kenner, said she would work with Shadoin to find a better bracket structure, but later voted against the bill.
State Rep. Major Thibaut, D-New Roads, alleviated some concern by offering an amendment that would combine each aspect of the bills.
“The only chance in hell you have to get this out of here is if you tie it all together. I’m just trying to give you a fighting chance.”
The bills were joined but the package burned anyway.