Jim Beam column:Tax reform hits first roadblock
Published 6:57 am Saturday, November 16, 2024
Republicans in the Louisiana House were on a tax reform winning spree until running into their first major roadblock Thursday. Here are some of the winning battles:
The House voted 87-11 for HB 1 that establishes a 3% flat individual income tax to replace a three-tiered tax structure. The legislation is awaiting a hearing in the Senate Revenue and Fiscal Affairs Committee.
That is 17 votes more than the 70 (two-thirds) needed to pass taxes. The state’s revenue loss would eventually be $1.3 billion.
HB 2 establishes a flat 5.5% corporate income tax for one year and a 3.5% tax in succeeding years. The House vote was 79-19. The flat tax would replace a three-tiered corporate tax structure now topped at 7.5%. It, too, is awaiting the same Senate hearing as HB 1.
HB 3 repeals the corporate franchise tax. The vote was 83-14 and the bill joins the other two in the Senate Revenue and Fiscal Affairs Committee.
HB 5 requires local school systems to provide $2,000 permanent raises for teachers and $1,000 for support workers. The vote on that bill was 99-0. Funds for the pay increases would come from savings for local school districts made possible by some education fund savings paying off some teacher retirement debt. The bill is awaiting a Senate Education Committee hearing.
HB 7 is a proposed state constitutional amendment that revises Article VII, the finance section of the state constitution. The vote on that bill was 81-15. Three education funds that are helping finance the teacher pay increases are in that bill.
HB 8 levies sales and use taxes on certain digital products and digital services. The vote was 80-19.
HB 10 removes a number of sales tax exemptions, exclusions, credits and rebates. The eventual vote was 71-23. The legislation was supposed to raise $820 million, but The Advocate reported the House adopted 47 amendments deleting some of those tax breaks without explanation.
Then, came the roadblock — HB 9 that would raise $500 million per year by extending the sales tax to 41 services that are currently untaxed.
The newspaper said Gov. Jeff Landry and House leaders tried to corral the necessary 70 votes by dropping a number of services that would be taxed, but the House adjourned until Monday when it will try again to pass it.
Rep. Julie Emerson, R-Carencro, who is directing the House’s tax reform legislation, admitted the necessary 70 votes weren’t there. HB 9 would eventually raise $482 million, which is needed to help offset the $1.3 billion cost of income tax reductions.
“Some people don’t like the bill at all,” Emerson said. “They just don’t like services. Some people don’t like particular services.”
The Advocate said Landry didn’t believe his tax reform plan was in trouble and the governor had met privately with House members for the second day in a row to tell them to dismiss naysayers.
The newspaper did add that the Senate appears to be planning to go even further in reducing how much money the tax package would raise.
The Senate is thinking about not eliminating tax credits for film producers and developers of historic buildings. Lake Charles has been a major beneficiary of credits for restoring historic buildings.
Lt. Gov. Billy Nungesser was in the city Thursday to mark the restoration of the old downtown Zephyr’s building and the New Orleans company that purchased it has made it past the first stage required to receive one of those historic restoration grants.
Nungesser, noting that state tax credits are on the chopping block, said, “Historical tax credits are a big issue in Baton Rouge, so I need everyone to contact their legislators.”
Like Landry, Senate President Cameron Henry, R-Metairie, squashed any thought that the governor’s tax reform plan is in real trouble. Henry said he expects the Senate to approve the plan with some changes.
“The Senate is on board with changing the direction of the state,” Henry said in an interview. “We know we have to make some tough votes that will benefit Louisiana in the long run.”
The toughest votes may come on March 29, 2025, when the state’s voters may be deciding the fate of as many as a half-dozen proposed state constitutional amendments, some of them complex. HB 7, for example, is a 140-page amendment revising the state constitution’s finance section.
Jim Beam, the retired editor of the American Press, has covered people and politics for more than six decades. Contact him at 337-515-8871 or jim.beam.press@gmail.com.
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