Provides relative to the net operating loss deduction from corporate income tax (EG -$146,000,000 GF RV See Note)
Impact
If passed, HB 153 would have significant implications for state tax revenue as it might reduce general fund income due to the increased deductions. The legislative analysis indicates that this could create a budgetary shortfall, estimated at approximately $146 million in general fund revenue. The change is designed to stimulate corporate growth and encourage reinvestment into the local economy, but it may also affect the state’s ability to fund public services, raising concerns about long-term sustainability of state finances.
Summary
House Bill 153, introduced by Representative Broadwater, seeks to amend Louisiana's corporate income tax regulations, specifically concerning the net operating loss (NOL) deduction. The bill aims to increase the allowable deduction from 72% to 100% of net operating losses incurred in Louisiana, thus allowing corporations to fully deduct their operational losses from their taxable income. This change is expected to benefit businesses struggling with profitability by providing them with more tax relief options. The new provisions would apply to taxable periods starting from January 1, 2020.
Sentiment
The sentiment surrounding HB 153 is split among stakeholders. Proponents from the business community argue that the increased NOL deduction will offer critical financial support to companies recovering from losses, thereby fostering job retention and economic growth. Conversely, critics, particularly fiscal conservatives and some legislators, warn that such extensive tax benefits could lead to mismanagement of state resources and a weakened budget framework, particularly in times of economic uncertainty.
Contention
Notably, the contention around HB 153 stems from concerns about the balance between encouraging business growth and maintaining sufficient revenue for public services. Opponents of the bill emphasize the need for a comprehensive fiscal impact review before approving such significant changes to corporate taxation. They argue that without stringent controls and evaluations, the proposed deductions might disproportionately favor large corporations while neglecting small businesses and essential public services.
Authorizes carry-back provisions for the net operating loss deduction for purposes of calculating corporate income tax (Item #20) (EG DECREASE GF RV See Note)
Individual income and corporate franchise taxes; subtraction for global intangible low-taxed income established, corporate net operating loss deduction increased, and dividend received deduction increased.
To Amend The Law Concerning The Net Operating Loss Income Tax Deduction; And To Increase The Carry-forward Period For The Net Operating Loss Income Tax Deduction.