Louisiana House members this year have passed tax breaks for corporations, investors renovating historic property and even bakery owners.
On Monday, they narrowly drew the line at giving a bigger tax break for the working poor.
The House defeated a proposal to double the state Earned Income Tax Credit on a 48-49 vote. The measure needed 53 votes to pass.
“I recognize that many legislators would rather give away incentives to business than to working people,” state Rep. Walt Leger, the bill’s sponsor, said afterward.
The Louisiana Budget Project, a Baton Rouge-based nonprofit that favors a more progressive tax system, said in a report that Leger’s bill would benefit the estimated 515,000 families in Louisiana that have claimed the credit in recent years.
The group noted that Louisiana has one of the most regressive tax systems in the country, meaning that poor people pay a greater percentage of their income in taxes than do the wealthy.
Leger, D-New Orleans, argued that his measure would help make the tax system fairer.
Leger’s legislation sought to double from 3.5 percent to 7 percent the state credit of the federal Earned Income Tax Credit.
The state credit currently costs Louisiana taxpayers $47 million per year, so doubling it would increase that cost to $94 million. The state sends refunds to those who qualify under the program.
The Louisiana Budget Project said the maximum federal credit in 2014 was $5,460 for families with two children, so a 3.5 percent state credit would mean an extra $191 to those families.
In a speech to the House, Leger argued that the legislation would help the working poor who are struggling to pay their bills.
“This will give a hand up to working families,” he said, adding that “it sends a message to the working people of the state.”
That was an apparent play off an argument last week in favor of phasing out the corporate franchise tax that doing so would send a positive signal to businesses throughout the state. That measure would cost the state $36.5 million next year while extending the historic tax credit would cost $45 million a year beginning in 2019 and expanding a sales tax break for bakery goods would cost about $4.7 million per year.
State Rep. Alan Seabaugh, R-Shreveport, sought to kill the Earned Income Tax Credit, calling it “essentially welfare written into the tax code.”
With an amendment he offered, Seabaugh said, “We’re not going to write the checks.”
State Rep. Pat Smith, D-Baton Rouge, questioned why Seabaugh wanted to stop tax refunds going to the working poor but not businesses.
“It’s unfortunate you feel that way about the poor people of Louisiana,” Smith said. “Shame on you.”
It was a rare personal rebuke on the House floor.
Other Democrats asked Seabaugh why he hadn’t sought to end various state tax breaks for millionaires or even Saints owner Tom Benson, a billionaire.
“We shouldn’t be putting taxes on business,” Seabaugh said.
Seabaugh voted against a bill that would eliminate 25 percent of the tax refunds that businesses get for paying the state inventory tax.
Leger said he hoped to revive his bill by having at least one of the opponents change their mind.
Follow Tyler Bridges on Twitter, @TegBridges. For more coverage of the state capitol, follow Louisiana Politics at http://blogs.theadvocate.com/politicsblog/.