Yesterday, it came out that Governor PBJ reached an agreement with State Senator Buddy Shaw, who introduced a bill to roll back the income tax brackets that came into existence as part of the Stelly Plan, which eliminated the state sale tax on items such as food for home consumption and state sales tax on natural gas, electricity, and water for residential use, and raised the tax brackets to make up for the lost revenue. This was one of the most progressive acts that Louisiana has ever undertaken to make the state tax code progressive, and fairer to those who can barely make ends meet.
Senator Buddy Shaw introduced SB 87 to roll back the tax brackets for those making between $12,500 and $50,000 back to its original rate of 4% from its current rate of 6%. The Democrats in the Legislature saw this as the first step in doing away with a progressive tax structure, so State Senator Nick Gautreaux submitted an amendment to do away with the state income tax completely over the next 10 years.
The Republicans in the Legislature saw this as a golden opportunity to finally achieve what they crave - a government so small you can drown in it in the bathtub. I think we all saw the results of that in the federal government's lackadaiscal response to Hurricane Katrina. To his credit, Governor PBJ rejected doing away with all income taxes, especially in the face of some pretty severe infrastructure needs here in Louisiana.
However, the compromise is a cop-out. Essentially, the Governor signed onto Buddy Shaw's plan, but delayed its' start date until January 2009. What that means is that most Louisianans won't notice it until they go get their taxes done in 2010! I'm betting the conservatives are going to be howling mad that Governor PBJ is not acting "conservative" enough.
It will be interesting to see if the Republicans in the Legislature go along with this compromise.
