The Louisiana House passed a number of bills Tuesday that are part of Gov. Jeff Landry’s tax reform session. The foundational legislation, HB 1 lowers the personal income tax rate to a flat 3%.
Rep. Julie Emerson (R-Carenco) said the state’s tax code, which hasn’t been revised since 1974, needs to be overhauled to deter residents from leaving the state, because neighboring states are proposing to lower or have no state income taxes.
“So I think in order to remain competitive, this is a tax policy initiative that we have to take on,” said Emerson.
In addition to lowering income tax rates, the House also passed HB 3, legislation to repeal the corporation franchise tax.
But Rep. Mandie Landry (D-New Orleans) voiced hesitation.
“So we’re supposed to vote on cutting the budget by about a billion dollars a year without roughly knowing now how we’re going to plug it?” Landry questioned.
Emerson said the shortfall will be addressed, for example with HB 9, which would tax more than 40 additional goods and services and HB 8 , which would place taxes on digital goods like Netflix and Spotify.
“There are other bills that have a positive fiscal impact and we can debate those when they come through,” said Emerson.
And among the highlights of the multifaceted HB 7, are no taxes on prescription medications and the standard deduction for those 65 and older will double.
But HB 7 met resistance from Rep. Tammy Phelps (R-Shreveport) because it also eliminates the Education Quality Trust Fund that supports early childhood education. Phelps wanted reassurance that the legislature will continue to dedicate funding for programs like Head Start.
“I’m just looking at the facts of repealing funds that were dedicated for such and we are already behind and have a waiting list,” said Phelps.
Emerson explained that HB 7 allows various trust funds to go towards paying down around $2 billion in debt from the teacher retirement system. With that debt reduced then school systems will have additional funds to go towards teacher pay increases of $2,000 and $1,000 for support staff. HB 5, a companion bill outlines those permanent pay raises. It’s scheduled to be heard in the House Appropriations Committee.
Legislation pertaining to tax reform, will go before voters in March.
