Voters would have the chance to institute a flat individual income tax rate in exchange for losing a popular tax break, under two measures approved by the state House on Wednesday night.
The bills would place a proposed constitutional amendment on the October ballot asking voters to replace the current graduated individual income tax rate with a flat 3.95 percent rate. To get that rate, taxpayers would no longer be allowed to deduct their federal tax payments on their state tax returns.
State Rep. Julie Stokes, R-Kenner, the sponsor of both bills, said swapping the tax break for a lower tax rate would be revenue neutral. She also said it would mean slightly lower taxes for the poor and slightly higher taxes for the wealthy.
If approved by the Senate, it would be on the ballot on Oct. 14.
Stokes’ measures – the first major tax bills to win approval in the House during the regular session – are modeled on one of the recommendations of a task force that spent 2016 studying the tax system.
She noted that Louisiana is only three states that allow the federal tax deduction.
Republicans in the House have been fearful that the Senate might change any House-approved income tax measures to raise more revenue.
State Rep. Jim Morris, R-Oil City, won a pledge from Stokes that she would kill the bills if the Senate did that.
The House also gave initial approval to a similar measure that would give voters the opportunity to eliminate the federal income tax deduction for corporations in exchange for a flat corporate income tax rate.
House Bill 356 by state Rep. Barry Ivey, R-Central, would call for the proposed constitutional amendment on Oct. 14. He still needs the House to pass House Bill 360 to establish the exact corporate income tax rate.
Voters soundly rejected a similar measure in November that would have lowered the current graduated corporate tax rates while eliminating the federal income tax deduction for corporations. Supporters of that measure have noted no organized effort emerged to push for its passage.