The Louisiana House amended, then rejected late Sunday, one of the last viable tax measures in the special legislative session that was called to raise money enough to cover deep cuts proposed for the state’s operating budget.
Only 23 percent of the state’s income taxpayers take advantage of the itemized deductions. They are mostly people who earn $100,000 or more per year.
The measure by Democratic Rep. Malinda White, of Bogalusa, was one of only three viable tax measures remaining that could help lessen cuts. Two others, Senate-approved proposals are scheduled for hearings Monday in the House Ways and Means Committee.
With no debate, the House rejected HB38 on a vote of 47 for to 55 against.
Only one Democrat, Rep. Major Thibaut, of New Roads, voted in opposition to HB38. (Rules allow a representative on the winning side to bring a defeated bill back up for another vote in the future.)
Anti-tax Republicans in the Louisiana House have largely blocked most of the revenue-raising measures during the 18-day special session that ends Thursday night.
The House and Senate have sent to the governor’s desk a package of tax bills that raise about $222 million of the $600 million that Democratic Gov. John Bel Edwards had been seeking to prevent cuts in state services when next fiscal year’s operating budget takes effect in less than two weeks on July 1. (That shortfall could now be as high as $800 million based on anemic corporate tax returns that came in last week much lower than expected.)
“With every vote against additional revenue, these members who refuse to compromise are voting to cut TOPS, K-12 education, higher education and lifesaving health care services,” Richard Carbo, Edwards’ communications director, said moments after the vote. “At the same time, they have not offered a single plan of their own to fund these programs. Edwards is not taking anything for granted, and he is still meeting with legislators to find the best path forward on a plan to stabilize our budget.”
“They voted to protect the interests of the super-rich,” House Democratic Caucus Chairman Gene Reynolds said.
Taxpayers are allowed to deduct various expenses from federal taxes, such as medical expenses, mortgage interest and charitable donations. If the spending exceeds the standard deduction, then the taxpayer can deduct the amount on federal tax returns.
Louisiana is one of four states that allow its taxpayers to write off the full amount on state income taxes.
Edwards had sought to reduce that deduction claimed by state taxpayers from 100 percent to about 57 percent, saying that amount would raise $113 million but still protect deductions for home mortgage interest payments and charitable deductions.
But too many in the Republican-led House balked, arguing it would not adequately protect those hallowed deductions and would increase taxes for many higher income taxpayers.
Without objection, the House accepted an amendment aimed at attracting supporters that would have raised about $50 million rather than $113 million originally sought. The change would have allowed taxpayers to continue deducting federal itemized deductions at 100 percent but would have removed the deduction for state taxes.
Two Senate measures could raise some revenues, though only about $81 million if they survive the House. Senate Bill 10 would ask large manufacturers to choose between the industrial exemption on local property taxes and a rebate on inventory taxes. Senate Bill 6 would reduce the cost to the state of the inventory tax credit.
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