Time ticks away with the governor's tax reform package hanging in the balance

Time ticks away with the governor's tax reform package hanging in the balance

NEW ORLEANS, LA (WVUE) - The regular legislative session must wrap up by June 8, and Gov. John Bel Edwards' tax reform package is not faring well.

"This plan is designed to bring much needed stability by broadening the base and lowering the rates to ensure that we can make strategic investments," Edwards said.

But the Democratic governor has met a wall of opposition in the Republican-dominated legislature.

This week the House Ways and Means Committee rejected a package of state income tax changes the governor proposed at the start of the session, including one Edwards said would cut taxes for 90 percent of individuals paying taxes, while shifting a higher tax burden on large businesses, and a bill that would do away with the federal income tax deduction for individuals and businesses on state income tax returns in exchange for lower tax rates.

"From day one this legislature declared its independence from the governor and true to form it's doing that again this legislative session when it comes to resolving the budget crisis," said FOX 8 Political analyst Mike Sherman.

The proposed income tax changes grew out of recommendations from the Task Force on Structural Changes in Budget and Tax Policy, which was created by the legislature during the first special legislative session in 2016.

Tulane economist Steve Sheffrin served on the task.

"The House has made it clear they are rejecting any type of tax reform.  That is their prerogative, but they have failed to offer any workable alternatives or deal with the upcoming fiscal cliff.  At some point, even they will have to agree to either an extension of roughly the current system or assent to a new approach.  But maybe only after multiple special sessions," he said in a statement to FOX 8 News.

As time winds down on the session, lawmakers are working with a glaring realization that $1.3 Billion in temporary taxes expire in 2018, including the extra penny tacked on to the state sales tax.

"This legislative session his plan is not moving forward but the legislature has acknowledged they're going to have to raise revenues and cut some of these credits if they're going to balance this budget," added Sherman.

Sales taxes in general are considered regressive by some policy groups.

But others say they spread the tax burden around because most people make purchases at one time or another.

"One of the few things Republicans and Democrats generally agreed on coming into this session is they'd love to get a sustainable fix to the budget and get rid of that extra penny, but that extra penny is one of the few options that offers cash quickly to the state if they can't agree on a sustainable new revenue structure," said Sherman.

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