Voters would be given the opportunity to establish flat income tax rates for individuals and corporations in exchange for losing a popular tax deduction, under bills passed by the Louisiana House Wednesday night.
The proposals would address complaints that the House so far had mostly ignored recommendations from a task force that spent 2016 studying the tax system at the Legislature’s request.
A profusion of tax breaks and giveaways in Louisiana’s tax code means tax rates are too high…
The House passed two bills on Wednesday. House Bill 359 would establish a flat 3.95 percent rate for individuals coupled with their no longer being allowed to deduct federal tax payments on their state tax returns. House Bill 360 would establish a flat 6.5 percent income tax rate for corporations coupled with their losing the federal tax deduction. The flat rates would replace the current graduated income tax rates.
Both bills now go to the Senate, which also has before it House-passed legislation to put the individual income tax measure on the ballot. State Rep. Julie Stokes, who orchestrated the approval of both measures Wednesday, said the plan is for the Senate to combine the flat tax bills into a single measure that would go before voters in October.
Stokes, R-Kenner, carried out the maneuver through two bills sponsored by state Rep. Barry Ivey, R-Central. If approved by voters, she said, the effect would be revenue neutral, although she acknowledged that some higher-income individuals might pay a bit more while some lower-income individuals might pay a bit less.
Only the day before, Ivey had vented his frustration at the House’s unwillingness to adopt the task force’s recommendations.
Louisiana legislators created a task force last year to issue a blueprint to reform the stat…
The task force recommended lowering income tax rates combined with eliminating the federal tax deductions, although the panel said the net effect of the proposals ought to raise more money to diminish the state’s reliance on sales taxes.
Both bills needed at least 70 votes, a two-thirds super-majority in the 105-member House.
In both cases, support came from a majority of Republicans – including most of the leadership team – and virtually all Democrats.
Voters in November rejected the corporate income tax swap, but supporters of the proposal said it was worth reviving because it could have passed with a lobbying campaign.
The House failed to approve another Stokes bill recommended by a different task force that spent a year studying Louisiana’s sales tax system, ranked as the worst in the country by the Tax Foundation.
Stokes’ House Bill 673 would align sales tax exemptions offered by state and local governments. Currently, parishes tax numerous transactions that the state exempts, a practice that Stokes’ bill seeks to end to simplify the sales tax system. The vote on HB 673 was 51-42, but it needed 70 votes.