Posted: Jun 17, 2011 4:14 AM by Lauren Wilson & AP
BATON ROUGE, La. (AP) - A proposal to repeal the state's personal income tax stalled Thursday after a majority of lawmakers in the House of Representatives backed studying how to make up the multibillion-dollar loss of revenue rather than removing the tax outright.
The House voted 57-35 for a change by Rep. Chris Roy, D-Alexandria, to require the study. Lawmakers are concerned state services could be devastated without a comprehensive plan to replace the money.
The Senate also supported the study, rather than a direct repeal.
Rep. Hunter Greene, R-Baton Rouge, shelved the bill when he couldn't get House members to support the elimination over 10 years, starting in 2014.
"What you've done is nothing. The income tax will not be repealed," Greene said. He added, "It doesn't have any teeth to it."
Greene can attempt to bring the measure up again, but time is getting short. The regular session ends next week.
The individual income tax is estimated to bring the state about $2.5 billion this year, and would give the state an estimated $5.4 billion in 2023-24, when it would be fully removed under Greene's proposal before it was reworked. The tax is charged by a graduated scale from 2 percent to 6 percent depending on people's filing status and taxable incomes.
Critics of an outright repeal said while they may support the idea of removing the tax, they'd like to know what services would be cut or what other taxes would be raised to fill the multibillion-dollar gap.
"I don't know whether or not I like doing away with the income tax or not until I see what the other options are. It sounds good," said Rep. Jim Fannin, D-Jonesboro, chairman of the House Appropriations Committee. "I don't think it's reasonable at all to want to do away with over $2 billion of revenue in this state without knowing where some of the replacement can come from."
Greene said government spending can shrink, and that lawmakers could remove some tax breaks to fill the gaps. He said lawmakers and the governor will have several years to prepare for the revenue loss.
"It's going to force this body, working with the administration and the Senate, to work on a plan because we'll face a cliff," he said.
Rep. Mike Danahay, D-Sulphur, said the conservative Legislature is unlikely to support the removal of tax credits and exemptions, because Republican Gov. Bobby Jindal and others have called such eliminations tax hikes.
In its current form and as approved by the Senate, the bill would create a that would recommend to lawmakers ways to reduce or eliminate the income tax, while accounting for the lost revenue either through proposed cuts or removal of existing tax breaks.
The commission's plan wouldn't be binding. Lawmakers could approve the recommendations, change them or discard them. The Legislature would have to take another round of votes before the income tax would be repealed.
Jindal has said he's not taking the income tax repeal proposal seriously until it contains a plan for not devastating higher education and health care services in the state when the tax revenue disappears.