Louisiana House Bill HB637

Louisiana 2013 Regular Session

• Introduced: 4/8/13
• Refer: 4/8/13

Caption

Phases out the state corporation income and franchise taxes over three years (OR -$103,000,000 GF RV See Note)

Impact

The implementation of HB 637 would significantly alter the financial responsibilities of corporations in Louisiana. By eliminating the corporation income tax and franchise tax, the state anticipates a reduction in tax revenue, estimated at approximately $103 million in general funds. The proposed law also retains existing provisions that exempt insurance companies from these taxes, effectively preserving a specific segment of tax revenues while providing broad relief to most corporate entities. As a result, businesses may find operating in Louisiana more attractive, potentially leading to economic growth and increased investment in the state.

Summary

House Bill 637 proposes to phase out the state corporation income tax and the corporation franchise tax over a period of three years. The plan is structured to reduce the tax rates incrementally, with a 66% reduction for the tax years beginning in 2016, a 33% reduction for the years beginning in 2017, and a complete elimination of the tax for tax years commencing on or after January 1, 2018. This proposed change aims to benefit both domestic and foreign corporations operating within Louisiana, ensuring that no corporate income tax will be levied effective from 2018 onward.

Sentiment

The sentiment surrounding HB 637 appears to be largely positive among business interests and economic advocates, who argue that the reduction in corporate taxes will stimulate business growth and attract new companies to the state. However, there is concern among some lawmakers and public policy advocates regarding the potential loss of state revenue. Critics argue that such tax cuts may harm public services or lead to budget gaps that could impact social programs and state-supported initiatives, raising questions about sustainability and fiscal responsibility.

Contention

A key point of contention within the discussions surrounding HB 637 is the balance between fostering a pro-business environment and maintaining adequate state revenues to fund public services. Proponents of the bill emphasize the need for competitive tax rates to stimulate economic development and business retention. On the other hand, opponents raise alarm about the long-term implications of such tax cuts, citing challenges in funding essential services and the potential for exacerbating inequalities in access to public resources. Hence, the bill illustrates the ongoing debate between tax policy aimed at economic stimulation and the necessity of responsible governance in maintaining state services.