Tax Swap Bill Passes as Louisiana Session Ends in Flurry of Tax and Financial Votes
BATON ROUGE, La. (AP) — Louisiana lawmakers have completed a nine-week legislative session. They've spent hefty sums of coronavirus recovery money, worked to overhaul the state’s tax structure and found themselves battling over social issues that nearly derailed the financial debates.
Legislators agreed to shift about $300 million a year in the sales taxes charged on vehicle purchases to roadwork in the future, taking it from the state general fund where it pays for government operations.
Tax Swap Legislation Headed To Gov. Edwards' Desk
The House and Senate brokered a bipartisan deal in the dwindling hours of session on a complicated set of tax swaps that they hope to persuade voters to pass in the fall election. The long-recommended proposal to untie Louisiana’s income tax collections from federal tax payments will head to voters for a decision on the October ballot. The proposal would get rid of personal income tax and corporate tax deductions for federal income taxes paid in exchange for lowering the state’s income tax rates.
Gov. John Bel Edwards could scuttle much of the overhaul if he vetoes individual pieces of a package that requires all measures to pass to take effect. But the Democratic governor said while he still needs to comb through the proposals, he expects to sign the bills.
Supporters say this is a revenue-neutral simplification of the state personal income and business tax code.
Pelican Institute CEO Daniel Erspamer has long supported the changes. The business and personal “tax swap” package, if approved, will cut income tax rates in exchange for eliminating the ability to deduct federal taxes from your state tax liability. Erspamer touted the changes saying not only would they lower tax rates, but they would “disentangle” state government revenue from ever-changing federal tax policy.
“We will have a more predictable and stable tax structure here in Louisiana,” said Erspamer.
The package also phases out the franchise tax for many smaller businesses and lowers the franchise tax rate over time for larger companies.
Erspamer notes that for most residents and businesses this isn’t exactly a net tax cut.
“In the short term, in the near term, it is absolutely revenue neutral for the state, and it should be neutral on average for every taxpayer in the state,” said Erspamer, who added “it makes Louisiana more competitive. We will have the lowest personal income tax rate of any state in South that taxes income and the fourth lowest income tax rate in the country.”
Opponents argue the reforms mostly benefit the state’s wealthiest individuals and corporations.
Assessors To Get Hefty Car Allowance
Lawmakers have agreed that Louisiana’s parish tax assessors should be able to give themselves hefty car allowances up to 15% of their annual six-figure salaries. A 38-0 Senate vote and a 76-25 House vote Thursday sent the bill by Republican Sen. Stewart Cathey to the governor’s desk for consideration.
Lawmakers said assessors earn between $135,000 and $172,000 annually. The measure would allow them to receive a vehicle allowance that is up to 15% of their salary on top of their yearly pay. The allowance could reach $20,000 to $26,000 a year.
Veto Session Possible
It’s unknown whether there will be a veto override session to overturn Edwards’ expected vetoes of controversial legislation involving transgender athletes and the concealed carry of handguns.
(Story written by MELINDA DESLATTE/AP & Matt Doyle/Louisiana Radio Network)