Tax cut on Stelly won’t be big one for most

• By WILL SENTELL AND MICHELLE MILLHOLLON
• Advocate Capitol News Bureau
• Published: Jul 20, 2008 - Page: 1A - UPDATED: 12:35 a.m.

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Are you expecting a big savings from the Stelly rollback that lawmakers are touting as the largest income tax cut in Louisiana history?

“A typical client of ours might get $6 per paycheck,” said William Potter, tax director at the accounting firm Postlethwaite & Netterville in Baton Rouge.

But state Sen. Buddy Shaw, a Shreveport Republican and the chief sponsor of the reduction, said lots of taxpayers will realize meaningful savings and celebrate the repeal of a long-criticized tax increase.

“When I was running for office, I actually walked door to door for nine months,” Shaw said. “What I would hear the first thing, almost invariably, was, ‘What are you going to do about the Stelly tax?’ It overshadowed everything else.”

Voters in 2002 narrowly approved the tax swap, which is named for former state Rep. Vic Stelly of Lake Charles, who sponsored the constitutional amendment.

The measure repealed the state sales tax on groceries and utilities. It also compressed state income tax brackets to offset the loss of tax revenue.

Backers said that made the state’s income tax setup more progressive and growth-oriented.

It also meant some taxpayers owed the state more, triggering complaints.

The Louisiana Legislature voted overwhelmingly last month, amid booming state revenue, to return state tax rates to pre-Stelly levels.

The reduction takes effect  Jan. 1, 2009.

Most taxpayers will start seeing their savings when they fill out their state income tax returns in the spring of 2010.

The total amount of taxes cut will be $359 million initially and average $286 million per year  for the first four years. The cut has been touted by Gov. Bobby Jindal, who joined the push late, and legislative leaders as one of the top success stories of the 2008 regular legislative session.

However, many lawmakers and others said during the debate that the tax relief is selective.