By MICHELLE MILLHOLLON
Advocate Capitol News Bureau
Published: Apr 30, 2008 - Page: 1A - UPDATED: 12:10 a.m.

The bill started as a $300 million tax break.

Now Senate Bill 87 would give taxpayers an even bigger break by gradually eliminating the state’s personal income tax.

The question is whether the amendment added by the Senate during lengthy floor debate will kill the bill entirely — and whether that was the whole idea.

Sen. Joe McPherson predicted the amendment will be portrayed as the Jindal administration’s attempt to derail the bill.

McPherson, D-Woodworth, apologized for voting for the amendment. He said he wanted to be on record as voting to get rid of state income tax but did not think the amendment would pass.

“I was playing one of my cutesy deals, and I messed up,” he said.

Sen. Robert Adley, R-Benton, said Gov. Bobby Jindal will have no choice but to veto the bill now that it would eventually reduce state revenue by $4 billion a year.

“And he ought to (veto it),” Adley said.

For his part, Sen. Nick Gautreaux, D-Meaux, insisted the administration did not prompt him to propose the amendment.

He said he wants to make Louisiana more competitive by eliminating the state income tax.

The bill’s sponsor, Sen. Buddy Shaw, tried and failed to strip the amendment from the bill.

Shaw, R-Shreveport, rejected suggestions he return the bill to the Senate calendar rather than allow it to go to the House.

“I’m going to press this bill forward,” he said.

The Senate voted 38-0 in favor of sending SB87 to the House with the amendment.

Originally, SB87 simply would have revised the income tax brackets the Stelly plan changed.

The Stelly plan, named for the legislator who drew up the measure, phased out state sales taxes on necessities while increasing income taxes for some wage earners.

Stelly divided wage earners into three tax brackets.

For individual filers, those brackets are:

• Income up to $12,500 is taxed at 2 percent.
• Income between $12,500 and $25,000 is taxed at 4 percent.
• Income over $25,000 is taxed at 6 percent.

The thresholds are doubled for joint filers.

Shaw wanted to carve out the 4 percent tax bracket for people who make between $12,500 and $50,000.

He noted that legislators agreed to Jindal administration-backed tax breaks for businesses in a special session earlier this year.

“If we can do things for business … we can do something for the majority of taxpayers out there,” Shaw said.

In committee, the Jindal administration said state government could not afford Shaw’s tax break.

The governor’s office later said Jindal would support “additional conservative tax cut proposals that include accompanying spending cuts.”

The Legislative Fiscal Office estimated the bill would reduce state government revenue by $302 million in the first year.

On the floor Tuesday, Shaw said the state can afford the tax break, especially when oil prices are at a record high.

“Bureaucracy has been spending money for bureaucracy,” Shaw said. “What we’re trying to do now is send it back to the people.”

Gautreaux’s amendment changed the focus of the bill by adding a gradual phase-out of the state personal income tax.

Income tax would decrease 10 percent a year, disappearing entirely by Jan. 1, 2017.

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