A second special session may be called to plug $600 million budget deficit.
Is Another Tax Hike Coming?
The 2016 regular legislative session will adjourn on June 6, and while tax hikes or tax deduction adjustments are off the table during the regular session, special sessions are another matter. Gov. John Bel Edwards plans to call legislators into a special session this month to address tax changes to bridge the state’s $600 million budget gap and prevent deep cuts to state programs.
Among the expected proposals? A personal income tax hike.
While specific details aren’t known at this writing, The Advocate reported that the main revenue-raising proposal appeared to be limiting the deduction that individuals can claim on their state income taxes—effectively a tax increase. Currently, taxpayers can deduct from their state taxes the full 100 percent of the itemized deductions they claim on their federal tax returns. The allowable deduction amount used to be 57.5 percent of those itemized deductions, but during Gov. Bobby Jindal’s administration, the Legislature approved raising the deduction to 100 percent.
If the deduction rate is reverted to 57.5 percent, taxpayers could still claim deductions for mortgage interest payments and charitable contributions. The Advocate
reported that this move would raise about $150 million per year and taxpayers earning more than $103,000 would shoulder the bulk of the increase. What this really means is that small business owners—many of whom pay their business taxes at the individual rate as pass-through entities—would be hit with yet another tax increase.
Contact your legislators to let them know how a personal income tax increase would impact small businesses and look out for a state ballot on the pending special session.
