Gov. Jeff Landry’s tax overhaul faces its first big hurdle on Tuesday afternoon, when the full House is scheduled to vote on proposals to sharply cut Louisiana’s personal income tax, repeal the corporate franchise tax and rewrite the section of the state constitution that governs taxes and budgeting. The Times-Picayune | Baton Rouge Advocate’s Tyler Bridges reports:
Moving from the current three-tiered individual income tax to a flat 3% rate (Rep. Julie Emerson’s House Bill 1) and putting the tax amendment on the March 29 ballot (her House Bill 7) will require a super majority of at least 70 votes. Abolishing the .275% corporate franchise tax — which is levied on assets — requires only a simple majority of 53 votes. It is House Bill 3. If the bills pass, they would move to the Senate Revenue & Fiscal Affairs Committee, the next step in the legislative process. That will present a new challenge for Landry because senators have been more willing than House members to buck the governor during his 10 months in office.
The more politically difficult part of the governor’s plan is gaining approval for $1.4 billion in new and renewed sales taxes to offset the cost of corporate and individual income tax cuts. The Louisiana Illuminator’s Greg LaRose reports that lawmakers took the first step of applying new taxes to digital streaming services on Monday.
The Louisiana House Ways and Means Committee advanced House Bill 8 with no opposition Monday. It applies the state sales tax to several digital products and services including online news subscriptions, video games and smartphone applications. Communications tools such as Zoom would also be taxed.
Landry wants to renew an expiring 0.45% state sales tax and expand the sales tax to 42 different services. Those moves are needed to recoup some of the revenue that will be lost from the tax cuts that will flow largely to wealthy people and large corporations. View the full list of new services being taxed here.
Spending limit advances
A proposal that seeks to tie the hands of future legislators by restricting their ability to spend available tax dollars on new programs or services is heading for a vote on the House floor. As the Louisiana Illuminator’s Wesley Muller reports, House Bill 14 by Rep. Brett Geymann creates a new, restrictive state “spending cap” and was folded into a 139-page constitutional amendment that is a centerpiece of Gov. Jeff Landry’s agenda:
Rep. Julie Emerson’s bill (House Bill 7) calls for a rewrite of Article VII of the Louisiana Constitution, which deals mostly with taxation and spending. But unlike [Rep. Brett] Geymann’s proposal, much of Emerson’s bill is aimed at removing spending restrictions from the constitution and giving the Legislature more flexibility to manage state tax revenues.
Muller reports that at least one lawmaker is worried about the consequences of such new restrictions:
“I don’t see why we would ever want to put that in the constitution and complicate that process,” [Rep. Matthew] Willard said in a phone interview. “I think it’s certainly going to tie our hands and the hands of future legislators.”
Reality check: This new restriction is unnecessary, as Louisiana already has a spending limit in its constitution. Legislators also have the ability to restrict what they spend each year with a simple majority vote in both chambers.
Sending more children to adult prisons
While tax policy has garnered the biggest headlines, Gov. Jeff Landry’s special session agenda also includes items related to “crimes that are subject to special juvenile procedures.” The Louisiana Illuminator’s Julie O’Donoghue explains how lawmakers are trying to make it easier to send children to adult prisons:
In Louisiana, 15- and 16-year-olds, and in more limited circumstances 14-year-olds, can already face adult prison sentences, though only for limited crimes. These include murder, attempted murder, manslaughter, rape, armed robbery, kidnapping, aggravated battery, a second or subsequent burglary of an inhabited dwelling and a second or subsequent violation of some drug crimes. The constitutional amendment, proposed by Sen. Heather Cloud, R-Turkey Creek, would strike that specific list from a juvenile justice provision in the constitution. Instead, she wants to insert language allowing a minor to be charged like an adult for “any crime” as long as lawmakers pass new laws to do so.
Senate Bill 2, which advanced out of the Senate Committee on Judiciary C last week, is scheduled for debate in the full Senate on Wednesday.
What Trump means for Inflation Reduction Act
Many climate-change experts and advocates are concerned about what a second Donald Trump presidency, including the nomination of Lee Zeldin to run the Environmental Protection Agency, will mean for efforts to reduce planet-warming fossil fuels. Much of this anxiety centers on the fate of the 2022 Inflation Reduction Act, the nation’s largest investment in climate change and renewable energy policies. But as the Associated Press’ Jennifer McDermott and Matthew Daly explain, a complete repeal of the landmark law seems unlikely:
If Trump does target the climate law, there are provisions that are likely safe. One is a credit for companies in advanced manufacturing, because it is perceived as “America first and pro-U.S. business,” said David Shepheard, partner and energy expert at the global consultant Baringa. Incentives for electric vehicles are likely most at risk, he added. In a call Wednesday morning, Scott Segal, head of a communications group at the law firm Bracewell LLP, which represents the energy industry, said the climate law is not likely to be repealed. Dan Jasper, a senior policy advisor at Project Drawdown, said repealing parts of the climate law could backfire because most of the investments and jobs are in Republican congressional districts.
Number of the Day
51% – Proposed tax rate on winnings from online sports wagers, up from 15%, under legislation introduced this week. Louisiana would be tied for the highest online sports betting rate in the nation. (Source: Tax Foundation)