Provides for a 5-year phase out of the state tax levied on the net income of individuals and includes special provisions relating to persons age 65 and older
Impact
The passage of HB 632, if enacted, would lead to significant changes in state tax law related to individual income taxation. It aims to provide financial relief for individuals, especially seniors, which advocates argue will stimulate economic activity by increasing disposable income among retirees. By 2019, the positive impact would be pronounced, as the removal of income tax would significantly alter the financial landscape for many Louisiana residents, potentially strengthening consumer spending and economic growth.
Summary
House Bill 632 aims to phase out the state income tax on individuals over a span of five years, starting from tax year 2015. The bill outlines a gradual reduction of tax rates for non-seniors, decreasing these rates to 80% in 2017 and 60% in 2018 and 2019, with complete elimination of the tax for individuals in the specified category starting January 1, 2019. The goal is to ease the tax burden on Louisiana residents, particularly benefiting those who are 65 years of age or older by fully exempting them from state income tax during the specified timeline.
Sentiment
The sentiment surrounding HB 632 appears to be largely supportive among those advocating for reduced taxes, particularly among senior citizens and their advocates. Proponents argue that the removal of income tax for seniors not only acknowledges their contributions to society but also aids in their financial stability during retirement. However, the bill may face skepticism or opposition from those concerned about the potential impact on state revenue, with worries that reducing income tax could lead to budget constraints affecting public services.
Contention
Notable points of contention include the long-term effects of phasing out the income tax, particularly on state funding and the services that depend on tax revenues. Opponents might argue that reducing income tax revenues may force the state to make difficult budgetary decisions in the future, affecting funding for essential services such as education and healthcare. Additionally, discussions may surface around whether such a tax reduction primarily benefits wealthier residents rather than addressing the broader economic issues faced by all Louisiana citizens.
Phases-out the taxes levied on the income of individuals and estates and trusts and reduces the amount of exemptions, deductions, and credits that may be claimed to reduce income tax liability (OR DECREASE GF RV See Note)
Phases in certain exemptions for capital gains income and investment income of an individual 65 years of age or older from state individual income tax. (gov sig) (OR -$33,100,000 GF RV See Note)
Phases-out the taxes levied on the income of individuals and estates and trusts and reduces the amount of exemptions, deductions, and credits that may be claimed to reduce income tax liability (EG DECREASE GF RV See Note)