[StBernard] Senate approves income tax breaks

[Westley Annis]

By MARSHA SHULER
Advocate Capitol News Bureau
Published: May 24, 2007 

The Louisiana Senate today overwhelmingly endorsed legislation that would
reduce the state income tax paid by many middle- to high-income Louisiana
residents.

The Senate voted 35-0 for legislation that would restore state income tax
breaks for such things as home mortgage interest, medical costs and
charitable gifts.

Senate Bill 66 now moves to the House, where its fate is uncertain.

Gov. Kathleen Blanco has also urged caution in considering myriad tax cuts
filed by lawmakers in a time of major budget surpluses and soaring revenues.

"We have all this money today. We ought not keep it," said state Sen. Robert
Adley, D-Benton. "We have the opportunity to give something back to the
taxpayers."

The Senate action is the first time a legislative chamber has gone on record
for a change in the 2002 Stelly plan. The plan, named after its sponsor,
then state Rep. Vic Stelly, was a so-called tax swap. It cut sales taxes on
groceries and residential utilities while increasing income tax rates.

The excess itemized deductions - allowed on federal income tax returns -
were eliminated by the Stelly plan.

Under the plan contained in SB66, the itemized personal deductions would be
phased in at 57.5 percent beginning this year - at a $157 million state cost
- and it would reach 100 percent in 2009-10.

About one-fourth of Louisiana's income tax filers itemize.

Adley called it a compromise among those who had bills offering tax breaks
of one kind or another. Several legislators had favored adjusting the
state's income tax brackets, which changed under Stelly. Those are left
alone in SB66, as well as the sales tax break.

Sen. Walter Boasso, D-Arabi, said the tax break idea is a good one. But he
wondered how the state could afford it. Boasso said state revenue forecasts
"show little to no growth over the next five years."

"Once the surpluses are spent &hellip we are going to be cutting the
budget," said Boasso.

Adley said state taxpayers, particularly those affected by the bill, are
responsible for the revenue increases the state is enjoying. He also said
Louisiana is one of the highest in state and local taxes in the South.

"It makes sense to reduce some of that burden so you can keep the economic
engine running," said Adley.

Adley said money estimated to be generated from income taxes is more than
double what was originally predicted, and 90 percent of it is attributable
to the excess itemized deduction.

Adley said the state budget is growing too fast. It should not grow "faster
than the people we represent," he said.

Senate President Don Hines, D-Bunkie, said he has not had one constituent
call to complain about the tax.

Sen. James David Cain, R-Dry Creek, who has had past legislation to change
the Stelly plan, complimented those who got together to work out the
tax-break compromise.

"I begged people not to vote for it. That's a $1 billion tax increase in the
first 10 years" even though it was promoted as a tax cut or tax neutral,
Cain said.

Cain noted that a group of teachers were in the Senate chamber opposing the
move. "That's what hurts me the most," said Cain. He said many in their
number are being hurt by the Stelly income tax. "It hurts the middle class,"
he said.

"Only seven states in America do what we do. We are the only state in the
South doing it," Cain said.