In the Face of Budget Difficulties, Louisiana Lawmakers Propose Tax Cuts

In spite of deep cuts looming over next year’s budget, Louisiana lawmakers are proposing millions in tax breaks which would benefit small businesses, property owners, green building projects, ports and more. The proposed tax cuts would drain much needed dollars from Louisiana’s treasury.

Lawmakers are pushing for tax breaks for Brad Pitt’s “Make It Right Foundation,” which helps rebuild hurricane-damaged housing in one city neighborhood along with rehabilitation of historic structures.

The fact that critics are calling the tax break proposal absurd is not surprising. The state has a $1.6 billion budget shortfall for the new fiscal year beginning July 1. Republican and Democratic lawmakers proposing the tax breaks, many of whom are making election bids this fall; say the measures will encourage economic growth and help people struggling in the tough economy.

With the state caught up in budget troubles, even legislators offering tax break bills question whether they can get them approved.

Unfortunately, few of the tax cut bills have financial analyses attached indicating their potential costs.

Louisiana must have a balanced budget, so if lawmakers pass tax breaks, they’ll have to find a way to either replace the lost cash or add cuts to a list that already include reductions to education programs, mental health services and charity hospitals.

New Orleans Rep. Walker Hines, who recently switched to the GOP, is proposing to eliminate all state taxes on personal income and businesses, while also doing away with any exemptions and rebates currently given from state sales taxes. Hines said many of the tax credits on the books only apply to special interests.

“I felt compelled to introduce a simpler, fairer, and more transparent reform to our tax code, which will stimulate new trains of thought in our tax and revenue debate,” he said in a statement.

Eliminating income taxes would cost the state billions in lost revenue. It was uncertain if Hines would propose to raise state sales tax to fill the gap, or if he expects the elimination of tax breaks to offset the lost tax income. Hines said he wasn’t sure if he’d even proceed with a vote on his bill, until he gets estimates of its impact from legislative budget analysts.

A coalition of nonprofit organizations, unions and advocacy groups — Better Choices for A Better Louisiana — wants lawmakers to review the state’s 441 tax exemptions, tax breaks that cost the state $7 billion in lost revenue each year and for a moratorium on all new tax breaks until the current ones are reviewed to determine their worth to the state.

Opposed to undoing any existing tax exemptions is Gov. Bobby Jindal. His support is going to a package of tax break renewals for businesses which generate high quality jobs, research and development firms and digital media and software development companies. According to the governor, incentives help attract companies and create jobs in Louisiana.

For information on tax-related subjects for the state of Louisiana, please visit the State of Louisiana Department of Revenue website at http://rev.louisiana.gov/