Major tax reform legislation passes House after failing the night before

House lawmakers on Thursday passed a major tax reform bill that had failed to gain enough votes the night before. House Bill 274, sponsored by Rep. Stuart Bishop (R-Lafayette), is a proposed constitutional amendment that would create new income tax rates and get rid of the law that lets residents deduct from their state tax returns what they paid in federal taxes.

The House voted 98-2 for the bill — a significant change from Wednesday when a 66-26 vote in favor of the legislation fell short of the 70 votes needed for a constitutional amendment. 

The Louisiana Legislative Black Caucus played a role in the legislation not passing Wednesday. The caucus had warned House leaders it would not support the tax reform package unless Republicans added measures to benefit poor people, the caucus’s leader, Rep. Ted James (D-Baton Rouge), told the Illuminator. But on Thursday, even without the changes they requested being added, every member of the caucus except Rep. Kenny Cox (D-Natchitoches) voted for the legislation. Also opposed was Rep. Robby Carter (D-Amite). 

The GOP is two votes shy of having a supermajority of 70 members in the House. Therefore, they didn’t need the Black Caucus’ support to pass the bill. A combination of all the chamber’s Republicans and two independents or two Democrats would be sufficient. On Wednesday, the bill had the support of Democrats 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, but the effort failed because not enough Republicans were present for the vote.

Although the bill failed Wednesday, Rep. Barry Ivey (R-Central) said the vote provided a “watermark” for whether more work was needed to garner support for the legislation. 

In an interview Thursday, Rep. Sam Jenkins (D-Shreveport), a member of the Black Caucus, said the caucus changed its position because Republicans indicated, without guaranteeing, they would support two of their measures: House Bill 659, which would establish an income tax credit for taxpayers claiming a dependent less than eighteen years of age, and House Bill 7, which would establish the so-called “pink tax exemption” on the sales of feminine hygiene products and diapers.

House Bill 7 passed the House on Thursday in a 57–40 vote, while House Bill 659 is scheduled for floor debate on Monday. 

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

A floor amendment, tacked on Wednesday by Rep. Mark Wright (R-Covington), establishes triggers to automatically lower the tax rates when state tax revenue increases to a certain point. 

The bill was ordered to the Senate for consideration, where it also will need two-thirds support to pass. If successful, it will be placed on a ballot for Louisiana voters to consider on Nov. 8, 2022..

Staff writer Julie O’Donoghue contributed to this report.