by Rep. Steve Scalise
With a projected surplus of more than $1 billion, we have a unique opportunity this session to make significant reforms to our state's tax code. Rather than spending all of the surplus on new government programs, we should use at least half of this money to reduce the tax burden on families and businesses throughout Louisiana.
The most effective way the Legislature can help families is to repeal the tax increases brought on by the Stelly Plan. The Stelly Plan made a number of changes to our tax code. While it repealed the state sales tax on food and household utilities, it also increased personal income tax brackets and repealed some tax deductions that were enjoyed by families. The overall result of this change has turned out to be a multi-million dollar net increase of new taxes the state is collecting.
Legislation has already been pre-filed this year to modify the Stelly Plan to make it revenue- neutral rather than a large tax increase. Some bills will restore the excess itemized deductions for things like home mortgage interest and charitable contributions that were eliminated by the Stelly Plan. Other legislation will reduce income taxes by compressing the brackets closer to their levels before the plan took effect. Of course these proposals will spark an interesting debate on tax policy that will impact hundreds of thousands of families in Louisiana.
Over the last 20 years, Louisiana has been the only state in the South to lose population. Based on the loss of population we have been experiencing, we will lose a seat in Congress after the next reapportionment in 2010 unless we quickly start making our state more competitive. A large part of that exodus has been middle-class families. If we pass these tax cuts, we will be sending an important message to middle-class families that we want to become more competitive with states like Texas and Florida that have no personal income tax. We will also be sending a message that we want to reverse the trend of out-migration and bring back families who have left.