The House Ways and Means Committee has started looking at how Louisiana could change it's method of taxing. On Tuesday, the focus was on personal income taxes.
Multiple bills have been filed to change the way your federal and state tax returns sync up.
Currently, taxpayers in Louisiana can claim 100 percent of their federal excess itemized deductions. Speaker Pro-Temp Walt Leger (D-New Orleans) brought a bill to "reduce the 100 percent excess itemized deduction to 50 percent.”
While Representative Ted James (D-Baton Rouge) proposed eliminating the state tax deduction for federal income taxes paid, a recommendation also brought by the Task Force on Structural Changes in Budget and Tax Policy.
Changes to personal income tax rates are also being considered, with some lawmakers, including Representative Barry Ivey (R-Baton Rouge), looking at what’s known as a flat tax rate, which he proposes would initially be 4 percent for individuals.
Representative Julie Stokes (R-Kenner) had a variation on the flat tax. It’s a tiered approach, with rates of zero and 3.95 percent. She says it wouldn’t have an impact on the revenue the state brings in.
“The reason why it was chosen that way is because we don’t want to be regressive in nature,” she explains.
Chairman of Ways and Means, Neil Abramson (D-New Orleans), says they want to hear all the options, so they make sure they get it right and keep it as revenue neutral as possible.
“While we’re dealing with budget issues and deficit issues and revenue issues," he says, "one of the goals we’ve overlaid on top of all that is to make sure we’re looking at good tax policy.”
Because many of the bills are part of a package, the Committee is determined to see how reforms to one tax structure may affect another. Therefore, no votes were taken Tuesday. Bills on altering corporate income taxes will be heard Wednesday.