Louisiana House Bill HB95

Louisiana 2017 Regular Session

• Introduced: 3/23/17
• Refer: 3/23/17
• Refer: 4/10/17

Caption

(Constitutional Amendment) Eliminates the income tax deduction for federal income taxes paid for purposes of calculating corporate income tax liability

Impact

The bill's primary impact would be to increase the tax liability for corporations in Louisiana, as they would no longer be able to deduct federal income taxes when calculating their state corporate taxes. This could result in a higher effective corporate tax rate, which may contribute to an increase in state revenues. However, the measure may also lead to concerns among businesses regarding their financial burden, especially for those with significant federal tax obligations.

Summary

House Bill 95, introduced by Representative Leger, proposes a constitutional amendment to eliminate the deduction of federal income taxes paid when calculating state corporate income taxes in Louisiana. This change aims to modify Article VII, Section 4(A) of the Louisiana Constitution. If passed, the bill stipulates that the new rules would take effect on January 1, 2018, and would apply to all tax years beginning after this date. The proposed amendment will be submitted to voters during the statewide election on October 14, 2017, allowing the electorate to decide between a YES or NO vote on the measure.

Sentiment

General sentiment around HB 95 is expected to be mixed. Supporters may argue that removing the federal tax deduction aligns the state tax system more closely with traditional taxation frameworks, potentially leveling the playing field among corporations. On the other hand, opponents may see it as an added burden on corporations that could disincentivize business investment in the state. The debate will likely focus on fiscal responsibility, economic growth, and the effects on corporate financial operations.

Contention

Notable points of contention surrounding HB 95 include the balance between raising state revenues through taxation versus the potential negative impact on businesses operating within Louisiana. Critics may express concerns that the tax increase could deter new investments or push existing businesses to relocate to states with more favorable tax policies. This friction between taxation and economic viability will be an essential theme in the discussions leading up to the election.