Tax Reform Bills Start Moving
We’re halfway through the legislative session now, and the House Ways and Means committee finally began moving some tax reform bills Monday. As anticipated, the preferred plan is a package of bills authored by Representative Barry Ivey (R-Baton Rouge).
“The goal of my package is to broaden the base and lower the rates, create a flat tax for business and personal income tax, create stability within our tax policy and also help improve the overall business tax climate in Louisiana,” Ivey said, as he presented the group of 11 bills, linked together with amendments.
Under Ivey's individual income tax plan, for example, the tax rate would be 4 percent for all, instead of the current 2-4-6 percentages. The personal deduction would increase from $4500 to $12,500, and the earned income credit would double. Corporate income would be taxed at a flat 6.5 percent, and the franchise tax would be repealed.
“Is it your goal to solve the fiscal cliff problem that we’re dealing with, or would it be more or less revenue neutral?” New Roads Democrat Major Thibaut asked.
“I’m not driven by how much revenue the bills generate,” Ivey replied. “My whole effort has been to look at this from a pure tax policy standpoint – how can we make Louisiana more competitive? – understanding we have to pay the bills, as well.”
Ivey's complete package is now headed to the House floor. And today, Ways and Means will vote on the various proposals for sales tax reform, as well as considering Kenny Havard's “business tax” measure, described as a hybrid of gross receipts tax and conventional income tax.
The full Senate did some tax reform work Monday, as well, attempting to minimizing next year’s drop off the fiscal cliff.
“This is one of several bills that begins the process of sunsetting a variety of credits and exemptions,” New Orleans Senator J.P. Morrell told the upper chamber.
He had mixed results for his reform measures: one approved, one defeated and one returned to the calendar. But the full Senate did okay Alexandria Senator Jay Luneau’s bill to make some of the temporary reductions to income and corporate tax credits permanent. Taken together, the tax reform bills approved by the Senate Monday will save the state an estimated $40-million.
This afternoon, the full Senate will debate and vote on another batch of bills to delete some tax credits and exemptions.