Louisiana Tax Rewrite Officially Dead

Any chance that Louisiana legislators would make substantive changes to the state’s tax system before their lawmaking session ends was snuffed out over the weekend

Representatives Barry Ivey and Julie Stokes shelved their tax reform proposals in the Senate tax committee, rather than face certain rejection of them. The pair was proposing a flat tax plan they said would improve Louisiana’s rankings among other states.

The bills wouldn’t have raised revenue for the state or cut it. And that was the problem in the Senate Revenue and Fiscal Affairs Committee. Senators wanted a more comprehensive package of tax changes that could help address a looming, $1 billion budget gap in mid-2018.

But Ivey and Stokes, who both proposed far more extensive overhauls of Louisiana’s tax system, couldn’t get their bills through the conservative House if they were considered tax hikes. They had to pledge revenue neutrality to their House colleagues in order to get favorable votes.

The bills up for debate over the weekend would have eliminated the tax deduction that people and businesses can take on state tax forms for the federal income taxes they pay, and gotten rid of the graduated system of tax rates paid based on income levels. In exchange, they would have enacted flat, single tax rates for individuals and businesses.

Represenatives Ivey and Stokes said that would get rid of a heavily-criticized tax break that ties Louisiana’s system to the fluctuations of federal tax policy.

Senators applauded the work Ivey and Stokes had done. But they said they wouldn’t pass those tax bills without also reworking the billions Louisiana gives away annually in tax breaks.