La. House committee advances so-called 'loan' tax bill to help f - FOX 8 WVUE New Orleans News, Weather, Sports, Social

La. House committee advances so-called 'loan' tax bill to help fix next year's budget

House Ways and Means Committee (Source: WAFB) House Ways and Means Committee (Source: WAFB)
BATON ROUGE, LA (WAFB) -

Lawmakers in the House’s tax committee advanced a highly amended bill described as a "last resort" and a "safety net" for next year’s budget, reviving the governor’s attempt to raise more revenue.

The bill would temporarily reduce how much of the excess federal itemized deduction individuals can claim on their personal income tax, generating close to $113 million next year. The bill, which is part of the governor’s list of proposals, would only impact upper income earners or about one quarter of taxpayers.

HB 38 passed after a compromise amendment was introduced by House Ways and Means Chair Neil Abramson, D-New Orleans. A similar measure, HB 11died in the same committee last week

As it stands, individuals can claim 100 percent of their excess federal itemized deduction. The bill would reduce that to 57.5 percent as the lower threshold. Under the bill, individuals could still claim all of their mortgage interest as well as their charitable donations – even if that exceeds the
57.5 percent. 

Abramson said that his amendment would make the bill act effectively as a "loan" for the state. The tax policy shift would expire in 2018, at which time the state would have to pay back those who could not claim the full deduction. 

The amendment was met by great confusion in the committee, though the amended bill ultimately advance by a slim margin of just one vote. 

"If I was inclined to support the bill, I certainly could not do it with this amendment because of the tremendous amount of uncertainty and, in my opinion, the terrible policy," said Rep. Barry Ivey, R-Baton Rouge, who went on to describe it as the "worst policy" he had ever seen go through committee. 

The bill also has a stipulation in it so that it will work purely as a backup plan. It would only go into effect if other tax measures and the revenues from rising oil prices do not generate sufficient money to meet the budget needs. 

"This is a last resort, if additional revenue comes in, we're not doing this. This is a last resort revenue proposal," Abramson told the committee. 

Meanwhile, on the other side of the building, the Senate Revenue and Fiscal Affairs Committee advanced revenue bills that would generate close to $400 million next year. Close to $220 million comes from measures already approved by the House. 

Roughly $146 million comes from a bill sponsored by Sen. Rick Ward, R-Port Allen. SB 10 would put a restriction on how many tax credits large industries can receive. 

As it stands, certain industries can receive inventory tax exemptions as well as industrial tax credits. This bill would force them to choose one or the other. 

The bill faced pushback from lobbyists for the business community, who told the committee that they already had to shoulder the cost of other exemptions being reduced in recent years. 

Members of the largely Democratic committee took turns saying they had no choice but to act. 

"We're broke, sir. We can't afford to pay for businesses to come to the state, we don't have money to do it," said Sen. Jay Luneau, D-Alexandria. 

"We've got a very loud clock ticking and the people of Louisiana can't wait. And the people that require the NOW waivers, people that require education and hospitals, can't wait," said Sen. Troy Carter, D-New Orleans. 

The bill now heads to the full Senate for consideration. 

Copyright 2016 WAFB. All rights reserved.

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