20 June 2007

Floor action, Jun. 20: SB 341, HB 365

SB 341 would offer a five percent tax credit of the federal earned income tax credit to be applied on state income taxes. An amendment from the Senate lowered the amount from five percent to 3.5, which handler Rep. Taylor Townsend, who had his own version, said would bring them in line, dropping the recurring cost to $40 million.

Rep. Mike Powell asked whether it was possible that the state would pay out money to people who did not pay state income taxes. Townsend conceded this was possible for those who owed federal tax. Powell noted that this was not a refund, but rather the state giving money to these filers who paid no state income tax, a state expenditure.

The bill passed 90-12.

HB 365 would allow for a two-year phase-in of tax deductions for charitable donations and home mortgage interest, among other things, which would be 57.5 percent of for federal “excess” tax deductions, once amended by Townsend.

Rep. Steve Scalise wanted the proportion to go to 100 percent. But Townsend argued this amendment’s increase would not be responsible. “We can’t bankrupt the state, we have to have a balanced budget,” he said. He said there would be plenty of benefits from “investments” in the appropriations bills that would make up for not getting greater tax relief. “Let’s remain calm and under control,” he said.

Rep Eric LaFleur then asked to end consideration of amendments, followed by Rep. Cedric Richmond who, in a tongue-tied fashion, called the entire question which failed 43-56. Then the vote on the amendment to end consideration of amendments passed 50-48, leaving only Scalise’s amendment alive.

Scalise argued that not even $200 million in tax relief, despite a huge budget surplus, was being given at present and this was driving people from the state. He thought the Senate would increase it anyway. “Let’s give real tax relief,” he said. The amendment passed 51-48, and the bill subsequently passed 102-0.

THURSDAY: SB 145 is scheduled to be heard by the House and Governmental Affairs Committee.

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