A Louisiana House of Representatives committee will decide Monday whether to recommend a total repeal of the state income tax or reduce it.

Sen. B.L. "Buddy" Shaw, R-Shreveport, told the House Ways and Means Committee on Thursday he would prefer reverting to Senate Bill 87's original purpose, repealing income tax increases imposed in a tax shift adopted in 2002 known as the Stelly Plan. "If you go with the bill the way I originally had it, I believe the governor would sign off on it and I believe the Senate is going to concur."

However, Shaw said he would continue moving forward with the bill if the committee chooses to keep it as approved by the Senate -- repealing income taxes.

Senate Bill 87 started out as a tax cut for middle-income taxpayers who were moved into higher tax brackets by the Stelly Plan. An estimate worked up by the legislative fiscal office shows it would reduce state revenue by $300 million a year.

Sen. Nick Gautreaux, D-Meaux, got Senate approval of an amendment converting it to an entire abolition of income taxes over 10 years. That would result in $4 billion a year less in revenue when it fully went into effect.
Some have speculated Gautreaux was trying to kill Shaw's bill when he proposed the amendment. Rep. Johnathan Perry, R-Abbeville, told the committee "his intent was never to kill it." Gautreaux wants to eliminate income taxes and has proposed legislation in the past to do that.

"This bill, in either form, will put significant funds back in the hands of our constituents," said Rep. Hunter Green, R-Baton Rouge. "This bill almost puts a gun to the head of the Legislature," forcing it to be fiscally conservative.
The state Revenue Estimating Conference will meet this morning and is expected to recognize a significant amount of unspent cash. Committee members said this shows the state can afford to reduce taxes.

Gov. Bobby Jindal said he wants to use the revenue to supplant one-time money in the current budget and divert the one-time funds into surplus to be used in future years. Jindal has said he could support a tax cut.
Rep. Jane Smith, R-Bossier City, encouraged the committee to consider restoring Shaw's bill to its original form.

"I'm very intrigued with doing away with income taxes, but that's not the bill Sen. Shaw brought."

Rep. Roy Burrell, D-Shreveport, agreed. "If we go back to the original bill, it seems that would be a better situation."
But Smith said she's concerned the bill, without a commitment from the Jindal administration, could die.

Greene said he believes a large tax cut would stimulate the economy.
Fiscal analyst Greg Albrecht said it would not do that much. With today's world economy, he said, much of the additional expenditures would go out of state. The state would get sales tax revenue.

Reducing state spending by $4 billion would hurt the state economy, he said.
Shaw said two states at the top of most ratings -- Florida and Texas -- have no state income tax and the nation's lowest per-capita state spending.
Ernie LeBlanc, of Louisiana Budget Project, pointed out both of those states face deficits in the next two years because their property and sales taxes are not producing enough revenue to support state operations. Florida has to cut spending for health care, universities and public schools, he said.

Source: Shreveport Times