La. Senate votes to reverse part of 2002 'Stelly tax plan'

May 24, 2007
Reported by Associated Press

The Louisiana Senate voted today to reverse changes made in the tax code in 2002 and allow taxpayers to deduct home mortgage interest and charitable contributions from their state returns.

Senators voted to reverse part of the so-called "Stelly plan," the overhaul of the state tax code aimed at lessening the tax burden on the poor and shifting it to wealthier taxpayers.

They approved a bill by Senator Robert Adley which would also reinstate deductions for certain medical expenses.  Under the bill, taxpayers would be allowed to deduct a portion of those expenses, plus the mortgage and charitable contributions, beginning next year.  They would be allowed to deduct 100 percent of the expenses in 2010.

The Adley bill would mean a loss in state tax revenue of 157 million dollars in 2008, 190 million in 2009 and 308 million in 2010, when the measure would be fully in effect.

The Senate voted 35-to-0 for the measure despite objections from Senator Walter Boasso, who warned that the state's income is projected to flatten over the next few years, once hurricane recovery funds are spent.

The measure now moves to the House.

The House's tax committee has considered a handful of bills to reverse parts of the Stelly plan, but has not voted on the measures.