Bill now goes to full House, setting up a showdown between the House, and the Senate and the governor
BATON ROUGE -- As expected, the House Ways and Means Committee on Monday revived a proposal to phase out personal income taxes over 10 years, without tying the cuts to any actions by a study commission that the Senate inserted into the measure last week.
Sen. Rob Marionneaux says his bill gives rank-and-file taxpayers a breakThe action, made without dissent, sends the latest version of Senate Bill 259 to the full House and sets up a late-session showdown with the House on one side and the Senate and Gov. Bobby Jindal on the other.
Sen. Rob Marionneaux, D-Livonia, originally filed the measure as an outright repeal of personal and corporate income taxes, but he opted for a 10-year phaseout during Senate committee proceedings to delay the full fiscal impact of a bill that would sacrifice about $5 billion in annual revenue upon full implementation.
The Senate, at the urging of Jindal allies, voted 21-17 to modify the bill into a study commission, requiring a panel of state lawmakers and the governor to examine the litany of tax breaks -- exemptions, deductions, rebates and other abatements -- and suggest ways to roll those measures back to make the income tax revenue neutral to the state treasury. Only after receiving that panel's report in 2012 would the Legislature be able to approve final action on the income tax cuts, under the Senate version.
The House panel first stripped corporate income taxes from Marionneaux's bill, meaning it affects only personal income taxes as it moves to the floor. The panel also set the effective date as Jan. 1, 2014, a year later than the Senate version. Then, at the urging of Chairman Hunter Greene, R-Baton Rouge, the House tax committee opted to strip the trigger effect of the study panel, though they left the body in place. That means the commission still would meet to examine the $7 billion in tax breaks and suggest potential rollbacks as a way to offset the income tax revenue losses. But the income tax cuts would go into effect regardless of the study commission or subsequent legislative action on other tax breaks.
Marionneaux has framed his bill as a way to give rank-and-file taxpayers a break while forcing lawmakers to revisit the litany of special tax considerations that the Legislature has granted to targeted industries and individuals. Greene, who also filed income tax repeal bills this session, pushes the idea as a way to force lawmakers to prioritize state spending.
Opponents, including Senate President Joel Chaisson II, D-Destrehan, and several Senate Republicans aligned with Jindal have called the idea irresponsible, saying the move would gut the state's ability to support education, health care and public safety. Jindal has not opposed the bill publicly, but his aides have dismissed Marionneaux's and Greene's push, saying they will "take it seriously" when lawmakers come up with a state spending plan to go along with it.
Corporate and individual income tax, according to Department of Revenue figures, generated $2.675 billion in fiscal 2009-10. That is expected to balloon to $5.1 billion by fiscal 2023, making those levies together the largest portion of the revenue pie used to finance most of state government, from K-12 and higher education to the prison system and Medicaid insurance program.
According to the Department of Revenue, the 2009-10 exemptions included, among others: $3.895 billion in exempted sales taxes, more than the $2.465 billion that was collected; $1.33 billion in exempted corporate income tax, three times the $435 million the state took in; $1.074 billion in individual income taxes, compared with $2.24 billion in what was collected; and $354 million in waived severance taxes, compared with $774 million in collections.
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Bill Barrow can be reached at bbarrow@timespicayune.com or 504.826.3452.