Tax reform legislation fails to win enough votes in the Louisiana House

A major tax reform measure that proposed new income tax rates and a repeal of the federal income tax deduction on individual state tax returns did not get enough votes in the Louisiana House Wednesday. The bill’s sponsor, Rep. Stuart Bishop (R-Lafayette) said he will try again to pass it as soon as Thursday..

House Bill 274 received simple majority support, 66–26, but failed to win the two-thirds support required of proposed constitutional amendments. Tax reform has been a longstanding goal of Republicans, and lawmakers voted mostly along party lines with some exceptions. Democratic members Jeremy LaCombe of Livonia, Francis Thompson of Delhi and Malinda White of Bogalusa, as well as independents Roy Adams of Jackson and Joe Marino of Gretna supported the bill.

Just prior to the vote, the companion legislation, House Bill 278, passed in a very close 70–24 decision. Of the 13 members who either did not vote or were absent for the constitutional amendment bill, six were Republicans.

House Bill 274 is a proposed constitutional amendment that, along with its companion bill, would reduce the rates in Louisiana’s three income tax brackets as follows:

1. From 2% to 1.85% on the first $12,500 of net income.
2. From 4% to 3.5% on the next $37,500 of net income.
3. From 6% to 4.25% on net income in excess of $50,000.

The bill would also repeal the federal income tax deduction allowed on individual state returns, which policy analysts have said creates volatility in Louisiana’s annual revenue stream.

The Black Caucus warned House leaders they would not support the tax reform package unless the GOP included some legislation to benefit poor people, Rep. Ted James (D-Baton Rouge) said in an earlier interview with the Illuminator. 

Democrats are vastly outnumbered in the state legislature, and Republicans are only two members shy of having a super majority of 70 members. So either the chamber’s two independents or two Democrats are needed to reach the two-thirds vote required by a proposed constitutional amendment. Although two independents and three Democrats did support the legislation, the Republicans who were absent or didn’t vote kept the legislation from getting enough votes. 

As the House was wrapping up its agenda Wednesday evening, Bishop called his bill from the House calendar, where it had sat for nearly a month. Rep. Sam Jenkins (D-Shreveport) asked one of the few questions that Bishop fielded before waiving other questions and shutting down the floor debate that often occurs before votes are cast.

“Everybody’s not going to be treated equally with those brackets, don’t you agree?” Jenkins asked.

“Actually, it hurts the higher taxpayers more than it hurts anybody,” Stuart said.

“I’m not sure if I totally agree with that either,” Jenkins said.

Rep. Mark Wright (R-Covington) tacked on a floor amendment that establishes triggers to automatically lower the tax rates when state revenue increases to a certain point. He said it’s a system used by North Carolina.

“The way these triggers are setup, it’s done in a prudent way,” Wright said. “So if growth happens, then it allows for a reduction in the rate to make sure it stays revenue neutral.”   

Rep. Barry Ivey (R-Central) questioned Wright’s proposal, saying North Carolina has a flat tax rate unlike Louisiana’s three brackets. 

“We’ve got multiple brackets,” Ivey said. “How do you distribute the reduction across three brackets with three different rates…I don’t see that language in the bill, and so I believe it needs more work, and I don’t recommend passing it.”

Though Ivey did not support the amendment, he did vote in favor of the bill.