Leslie Turk

Jindal announces Stelly Tax elimination plan

by Leslie Turk

Yesterday's behind-the-scenes negotiations to kill a proposal that would have eliminated state income tax over time has apparently reached a compromise. Gov. Bobby Jindal today announced a plan to eliminate the Stelly Tax increase in 2009, which he says will result in a $300 million tax break, more than a billion dollars over the next five years.

S.B. 87 by Shreveport Republican Sen. Buddy Shaw, which thanks to Democratic state Sen. Nick Gautreaux of Meaux turned into a proposal to wipe out the state's income tax, changes the income tax rate for Louisiana residents making between $25,000 and $50,000 a year. Under Jindal's new plan, the current 6 percent rate will be reduced to 4 percent, the pre-Stelly Tax rate. Shaw, Senate President Joel Chaisson, Speaker of the House Jim Tucker, Rep. Hunter Greene and Sen. Rob Marionneaux joined Jindal in announcing the elimination of the Stelly Tax. "If the members of the House and Senate join us, this will be our sixth tax cut in four months," Jindal said.

Named for former state Rep. Vic Stelly, who devised the legislation, the Stelly plan divided income earners into three tax brackets: up to $12,500 is taxed at 2 percent; $12,500 to $25,000 is taxed at 4 percent; and $25,000 and above is taxed at 6 percent. Stelly also removed the excess itemized deduction and eliminated sales tax on food purchased for consumption.