Louisiana Enacts EITC and Other Tax Changes

Louisiana's 8-week legislative session came to a close late last month and Governor Kathleen Blanco has signed a variety of bills into law. HB 365 allows state income tax filers to claim the same itemized deductions they claim on their federal returns. The problem is, only the wealthiest 20 percent of Louisianans itemize. The estimated $157 million the provision will cost could be put to better use. SB 3 provides a "sales tax holiday" on the first Friday and Saturday in August and applies to the first $2,500 spent by consumers.The bill makes the holiday permanent and was introduced as a "back-to-school" benefit.The only improvement in tax fairness is SB 341, a progressive bill that provides for a refundable state Earned Income Tax Credit (EITC), equal to 3.5 percent of the federal EITC.This will distribute $40 million in refunds to low-income Louisianans (about 29 percent of all filers) on Tax Day.