Louisiana House Bill HB312

Louisiana 2015 Regular Session

• Introduced: 4/1/15
• Refer: 4/1/15
• Refer: 4/13/15

Caption

Reduces certain individual income tax rates and reduces certain income tax deductions and credits

Impact

The modifications proposed in HB 312 would directly affect Louisiana's tax code, specifically by decreasing the deductibility of excess federal itemized personal deductions from 100% to 80%. Additionally, the state tax credit against the federal earned income tax credit would be reduced from 3.5% to 2.8%. These changes could result in lower overall tax deductions for individuals, shifting the fiscal landscape for taxpayers relying on these deductions to lessen their taxable income. The bill is expected to take effect for all tax years beginning on January 1, 2015.

Summary

House Bill 312 seeks to amend existing Louisiana state tax laws by reducing certain individual income tax rates. Under the proposed legislation, the tax rate for the middle-income bracket would be lowered from 4% to 3%, and the upper bracket would drop from 6% to 4%. This measure aims to alleviate some tax burdens on individuals by decreasing the overall tax liability for those in the specified income ranges, potentially benefiting a significant portion of the state's taxpayers. The bill also addresses income tax deductions and tax credits, particularly concerning the 'excess federal itemized personal deductions' and the earned income tax credit.

Sentiment

There is a mixed sentiment surrounding HB 312 among legislators and constituents. Supporters argue that reducing tax rates will stimulate economic activity and provide much-needed relief for middle and upper-income individuals, potentially encouraging spending and investment within the state. Conversely, opponents of the bill express concern regarding the reduction of tax credits and deductions, fearing it could disproportionately affect those who rely on such provisions to manage their tax obligations effectively. The essence of the debate reflects broader discussions about tax policy priorities and economic strategy in Louisiana.

Contention

Notable points of contention arise from the bill's dual approach to lowering tax rates while simultaneously curbing deductions and credits. Critics argue that reducing the tax credit percentages may undermine the intended relief for struggling families who benefit from these financial aids, thus questioning the net benefit of the bill. Furthermore, discussions have highlighted the potential for economic disparity, as the changes could favor higher-income taxpayers at the expense of those in lower-income brackets who depend on deductions to lower their tax bills. As such, the legislative process surrounding HB 312 has illustrated the ongoing conflict between tax reduction initiatives and the maintenance of taxpayer support.