Tax Today (Maybe); Gone Tomorrow
House Ways and Means narrowly advanced one more revenue-raising bill Wednesday, reducing individual state itemized deductions to 57.5 percent of that allowed on federal returns -- maybe.
“If we end up with excess revenue, through any other source, this provision will be null and void everybody will get 100%. We will use the other money instead,” Ways and Means chair Neil Abramson explained.
The trigger is the state’s November revenue forecast. If it’s still down, the deduction reduction takes effect.
And for the 42.5-percent of excess itemized deductions you can’t claim on your state return, Abramson said, “They will carry forward and they will be recouped in 2018.”
“It’s kind of a last resort, safety net, short-term loan. If we need it, it will be there. If we don’t need it, we’re going to use other resources,” Abramson explained.
Baton Rouge Rep. Barry Ivey bristled at the ‘loan’ analogy.
“We’re borrowing today to spend today, and we may have to owe it back. Where do we get the money to pay that off?” Ivey asked.
“Why not apply this logic to all of our tax policy, where if we don’t need it, we’ll give it back – maybe – but if we do need it, we’re going to take it?” Ivey continued. “ I believe it sets a terrible precedent on tax policy.”
“We’re in unprecedented times with our budget crisis. Sometimes you need unprecedented ideas,” Abramson replied.
“We’re not really in a crisis. We passed a balanced budget,” he stated. “We have all this revenue on what we did on the first special session, we don’t even know. That’s going to obviously be something, and we haven’t recognized that.”
In addition, it was noted this measure sunsets the same time corporate tax credit reductions and sales tax increases do – giving Louisiana another massive fiscal cliff in January 2018.
Yet on a 10-9 vote, the bill advanced to the House floor.