Louisiana House Bill HB360

Louisiana 2017 Regular Session

• Introduced: 3/31/17
• Refer: 3/31/17
• Refer: 4/10/17
• Report Pass: 5/8/17
• Engrossed: 6/1/17

Caption

Levies a flat tax on business income and provides relative to business entities subject to the tax (RE SEE FISC NOTE GF RV)

Impact

The impact on state laws is substantial. The repeal of federal tax deductibility means Louisiana corporations will not be able to lower their state tax burden based on federal taxes paid, which can lead to an increase in their overall tax liability. This change could disproportionately affect businesses with higher federal tax burdens. Additionally, the switch to a flat tax could eliminate the incentives previously associated with higher tax brackets, leading some businesses to reassess their operations within Louisiana compared to other states with differing tax policies.

Summary

House Bill 360 proposes significant changes to the corporate income tax structure in Louisiana by repealing the deductibility of federal income taxes for corporations. The bill establishes a flat corporate income tax rate of 6.5% in place of the existing graduated tax rates which varied based on income levels. Supporters argue that this change will simplify tax calculations for businesses and potentially attract more companies to the state, stimulating economic growth. The new tax structure is designed to create a more predictable tax burden for corporations operating in Louisiana.

Sentiment

The sentiment surrounding HB 360 appears to be mixed among stakeholders. Proponents, including many in the business community, view the flat tax as a step towards a more business-friendly environment that could enhance competitiveness. However, critics express concerns that the bill may disadvantage small businesses and reduce public revenues that support essential state services, highlighting a potential trade-off between corporate tax relief and the funding of public goods.

Contention

Contention around HB 360 centers on how the changes will affect corporate tax obligations and broader economic implications within Louisiana. Critics argue that moving to a flat tax may reduce tax fairness, as corporations with lower incomes might fare better under the previous graduated structure. Supporters contend that simplification is key to ensuring compliance and attracting new businesses, thus promoting job creation. The discussions highlight a broader debate on balancing economic growth with equitable tax responsibilities in the state.