| The Louisiana State Senate decided to be statesmen yesterday, by voting 29-9 for SB 335 (pdf alert), which would freeze a planned excess personal tax deduction utilized by wealthier Louisianans for three years, in order to steer an additional $118 million to higher education, thereby ensuring that higher education does not face the draconian budget cuts that Governor PBJ is insisting they make.
The Governor's budget seeks to cut more than $200 million from higher education in the state in the name of spreading the pain due to the fiscal crisis we face. This is leadership at its' worst, as higher education is something that should never be sacrificed. Former chancellor Mark Emmert convinced Louisiana that LSU could be a great institution, as well as an economic engine in this state. He was right ... as LSU has seen its standing in the academic world rise over the last 10 years.
At the very moment in time that Louisiana is poised to reap the benefits of its investment in higher education, our "oh, he's so damn smart" Gov PBJ wants to gut higher education, all in the name of his presidential aspirations. He'd rather keep taxes low on one of his biggest donors - the tobacco industry; grant tax cuts to wealthy Louisianans who give him donations, and give away millions in corporate welfare to potential donors than show some leadership that shows some foresight beyond the next two presidential elections.
As for State Senator Buddy Shaw, the tax cutting fool, who benefits most from the personal tax deduction that would be frozen by this bill? The personal tax deduction in question allows Louisianans to deduct their excess itemized federal income deductions they claim on their federal tax return on their state return. Right now, those who itemize can claim 65% of their excess federal deductions on their state return.
Under legislation passed last year (or the year before, I'm not sure), those who itemize would have been able to claim 100% of their excess itemized deductions.
To make this clearer, everyone is allowed to deduct a statutory amount based on their filing status ($5,450 for a single taxpayer) from their income on their Louisiana tax return. A single taxpayer who itemizes their deductions (because of a mortgage, or high medical bills, a casualty or theft loss, or business deductions) on their federal tax return is allowed to deduct more than that ... up to 65% of the amount over the statutory $5,450.
Assume that single taxpayer itemizes their deductions and deducts $9,450. They take the $5,450 given to everyone and an additional $2,600 (.65 x 4,000) for a total of $8,050 in deductions.
Now, I've done taxes for the last three years at H&R Block. Most Louisianans don't have mortgages that enable them to deduct more than the standard deduction for their filing status. I've seen many married couples still take the standard deduction because their mortgage is less than the standard deduction.
Why did I explain all this in detail? Because the media is not making it clear that the deduction being frozen is only used by the wealthiest 20% of Louisianans. This is a deduction geared towards the top of the socio-economic ladder. And they don't need it. They already get to deduct 65% of the amount over the standard deduction we all get.
Do they really need the extra 35%?
Or do we need to invest in our higher education system? |
