BATON ROUGE, Louisiana (LSU Manship School News Wire) – The legislature passed three bills on personal income tax and corporate tax deductions on Thursday, including one that lowers personal income tax brackets.
The tax overhaul will allow individuals and businesses to reduce their income tax rates while waiving the right to deduct federal tax payments on their state returns.
Lawmakers backing the bills believe the so-called “tax swap” would simplify the tax code without significantly changing taxpayer balances. Republican leaders expect the state to bring in roughly the same dollar amount in taxes if the new laws are implemented, while other analysts suggest short-term revenue loss.
The bills, which were a top priority for Republican leaders, were finally passed in the Senate just hours before the legislative session expired. They will now move to the office of Governor John Bel Edwards.
If he approves them, they will be presented to voters in the state in October.
The three bills joined four other bills that lawmakers had passed earlier as part of a broader effort that Republican leaders touted as making the state more attractive to business and investment.
The bills were not without opposition, with Senator Karen Carter Peterson D-New Orleans speaking against one of the bills, Senator Bret Allain’s SB159, R-Franklin, which reduced the maximum rate personal income tax of 6% to 4.75 percent.
âThe problem I have with the bill is that it fits into the Constitution,â Peterson said. âIt suits written law but not constitutional law. Every time we want to touch the income tax rate again, we have to go back, pass it in the legislature, and pass it again with the people. I think this is a bad political decision for the state.
Allain led much of the tax overhaul and championed the final passage of SB159 in response to Peterson’s dissent.
âTo be clear, we’re setting a cap and we’ve given ourselves some leeway,â Allain said. âThe public will be assured that the tariffs will not exceed a certain amount. I think it is reasonable. It was requested. “
Following the remarks of Peterson and Allain, the bill passed Senate 34-3.
One of the bills, HB278, from Rep. Stuart J. Bishop, R-Lafayette, lowered the personal income tax rate for every tax bracket. The lowest bracket went from 2% to 1.85% on the first $ 12,500 of net income, the middle bracket from 4% to 3.5% on the next $ 37,500 of net income and the top bracket from 6 to 4.25% on income over $ 50,000. The bill was adopted in the Senate by 36 votes to 1.
For businesses, HB292, by Representative Neil Riser, R-Columbia, has changed the corporate tax rates and the number of brackets in which those rates apply, while also removing federal tax deductions on corporations. companies.
Under the bill, companies would now file under one of three tranches instead of five. The new bracket tax rates are now 3.5% on the first $ 50,000 of company profits, 5.5% on profits over $ 50,000 and up to $ 150,000, and 7.5% on income over $ 150,000, while the old five-bracket tax rates were 4, 5, 6, 7 and 8 percent. The bill was passed after a 36-0 vote.
Lawmakers said removing federal tax deductions would give the state greater stability in tax collection, which would no longer fluctuate with changes in federal tax rates.
Louisiana citizens will have the option of adding these bills to the Constitution on October 9, barring a veto from Edwards. He said he was ready to consider them as long as they didn’t cost the state a lot of revenue.
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