Bobby Jindal promised that taxpayers in Louisiana would get larger pay checks starting January 1, 2009, as a result of the passage of Senate Bill No. 87 of the 2008 Regular Session which returned the tax brackets to pre-Stelly Plan.

On May 14, 2008, Governor Bobby Jindal said the following:

“This is real tax relief that working Louisianans will notice in their paychecks starting January 2009. The elimination of the Stelly Tax increase means over three hundred million dollars in lower taxes next year – more than a billion dollars in tax relief over the next five years - and more money in the hands of families who will do a better job spending their money than the government would. This is another example of just how much you can get done if you don’t care who gets the credit.” Emphasis mine.

The amendment

During the House Floor debate on SB 87, House Speaker Jim Tucker offered an amendment to prevent the Department of Revenue from promulgating new tax withholding tables before July 1, 2009.

At the time Tucker was questioned about the impact of his amendment:

Tucker insisted the amendment still would allow taxpayers to start collecting fatter paychecks in six months.

The amendment, he said, would give taxpayers the choice of asking their employer to change their withholdings or of waiting until they file their income tax return in 2010 to glean the savings.

State Rep. Cameron Henry, R-Jefferson, accused Tucker of bait and switch.

He noted that the governor publicly announced the savings would begin Jan. 1.

Henry said the Legislature should not burden taxpayers with the responsibility of changing their withholdings.

“We’re sending a terrible signal,” Henry said. “We promised them Jan. 1, 2009.”

Tucker told Henry he was “absolutely incorrect.” The (Baton Rouge) Advocate June 5, 2008.

Calls to Speaker

Wednesday, after receiving inquiries from listeners (employers and employees) about getting the tax reduction in their paychecks beginning January 1, statewide radio talk show host Moon Griffon suggested to his listeners that they call Speaker Tucker to learn how. According to Tucker (statement above), taxpayers could ask their employer to change their withholdings to reflect the tax reduction.

The initial response from the Speakers Office was that they didn’t know how to get the reduction in their withholding. Later, after being bombarded by callers, the Speakers’ Office began sending out copies of Form 4-L from the LA Department of Revenue.

Bad idea

Griffon consulted with tax experts who told him that the form sent by the Speakers Office would not resolve the problem. The form only allows an employee to increase the number of dependents.

According to the experts, to increase one’s dependents above the number of actual dependents, in order to get extra money in their paychecks, would require them to lie.

Additionally, there is no relation between the number of dependents and the reduction in taxes as a result of the rollback of the Stelly Plan. As such, an increase in dependents may subject taxpayers to penalties for failing to withhold enough money on their state and federal tax returns.

Therefore, despite the promises of Jindal and Tucker, most taxpayers will get no State Personal Income Tax relief until they file for their state tax returns in 2010.

According to the experts, the only way for taxpayers to receive the tax relief they were promised is if the Department of Revenue promulgates new withholding tables prior to January 1, 2009.

Solution

The problem can remedied, but only if the leges come into a special session before the end of this year. Then SB 87 can be amended to delete the prohibition against the Revenue Department from promulgating new State Withholding Tables.

If you want to get the tax break you were promised, contact your lege and demand that they change the law before December 31, 2008.

Finally, Griffon will have tax experts on his radio show at 10:00 AM today to discuss further how we were misled. Listen live at: www.moongriffon.com

C.B.