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Tax bracket proposal crux of budget issue

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Rep. Stephen Dwight, R-Lake Charles, said Republicans oppose changing the tax brackets to increase taxes on middle- and upper-income taxpayers. (Sarah Gamard/LSU Manship School News Service)

BATON ROUGE — A proposal supported by the Legislative Black Caucus to adjust individual income tax brackets to raise $443 million in revenue is at the center of the latest dispute that has stalled talks on how to deal with a projected $1 billion budget shortfall.

The proposal, opposed by most Republicans, would increase income tax rates for single filers making more than $12,500 and joint filers earning more than $25,000. It also would slash the level of federal itemized deductions that could be written off on state returns to 50 percent from 100 percent.

Robert Travis Scott, president of the Public Affairs Research Council of Louisiana, said the changes in tax brackets would mean relatively small tax increases, mostly for taxpayers in the middle- and upper-income groups.

But Scott, who was a member of a bipartisan task force that suggested adjusting the tax brackets, also said that making those changes alone does not represent the kind of comprehensive reform that some of the proposal’s supporters claim.

Scott said the task force’s idea was to “not only raise tax revenue, but to offset that with lower rates” to achieve a more stable, predictable and fair tax collection.

“People are trying to argue that we’re a step closer to reform,” he said. But with the proposal as it now stands, he said, “We’re a giant step further away.” He added that legislators “want the money, they don’t want the reform.”  

Louisiana has progressive tax rates, which means that taxes increase as income increases. The proposal would not affect the lowest tax rate, which is 2 percent for single filers with net incomes of up to $12,500 and joint filers earning up to $25,000.

Single filers currently pay four percent on the next $37,500 of net income and 6 percent on income above $50,000. The thresholds for joint filers are twice as high: They begin paying four percent at $50,000 and 6 percent at $100,000.

Under the new proposal, single filers would pay four percent on net income between $12,500 and $25,000 and six percent on all income above that. Joint filers would pay four percent on income between $25,000 and $50,000 and six percent on income above that.

By Tryfon Boukouvidis and Drew White, LSU Manship School News Service