Ricky John Bergeron
June 2, 2008June movie releases
June 4, 2008A nonpartisan research group on Friday announced its opposition to an income tax break being considered in the Legislature, saying the idea is unrealistic and would make Louisiana too reliant on unpredictable revenue from oil and natural gas.
The Public Affairs Research Council said it opposed Sen. Buddy Shaw’s push to reverse the income tax increases that were approved by voters statewide in 2002 as part of the tax overhaul known as the “Stelly Plan.”
“The proposed return to pre-Stelly income tax rates and the state’s growing reliance on oil and gas revenues sets the state up for another boom-and-bust cycle,” the group said. “The elimination of the income tax, even if phased in, is not realistic.”
Shaw’s bill would change the tax brackets so that all filers would get a break on income over $12,500. An individual filer would get a maximum break of up to $500, and up to $1,000 for joint filers. Shaw, R-Shreveport, won the support of Gov. Bobby Jindal when he agreed to a compromise that would make the break effective sometime next year instead of this year, as the senator initially wanted.
Shaw and other lawmakers have said the tax break makes sense in a time of budget surpluses, when the state is flush with cash stemming partly from rising oil prices.
The tax break would mean a drop in state revenue of about $300 million, according to the Legislative Fiscal Office, though lawmakers are expected to differ on when it should take effect.
Although oil prices have been rising, PAR cautioned that prices could go in the other direction. The loss of revenue by Shaw’s tax cut would then force lawmakers to cut higher education and health care programs, the areas of the state budget most likely to get pared back.
“Further tax cuts or revenue dedications would exaggerate the state’s precarious position with a high dependence on volatile oil revenues and an inflexible budget,” PAR said.
The Shaw bill is set for House debate next week, and at least eight lawmakers have proposed amendments to tinker with it.
Most notably, House Speaker Jim Tucker, R-Terrytown, has an amendment that would direct the state Department of Revenue to adjust its withholding tables on July 1, 2009, meaning the lower tax rate would be applied to paychecks after that date and would not effect the budget for the 2008-09 budget year.
An amendment by Rep. Jane Smith, R-Bossier City, would have the agency adjust the tables on Jan. 1, 2009, meaning some of the revenue loss would affect that year’s budget.
