Louisiana House Bill HB747

Louisiana 2015 Regular Session

• Introduced: 4/3/15
• Refer: 4/3/15
• Refer: 4/13/15

Caption

Repeals the individual income tax deduction for certain net capital gains (OR +$3,700,000 GF RV See Note)

Impact

The repeal of the capital gains deduction could lead to an increase in tax liabilities for individuals who earn income from capital gains. By eliminating this deduction, the state intends to increase its revenue, which proponents argue could be invested back into public services or used to stabilize the state budget. However, the change raises questions about the long-term effects on investment in Louisiana, as potential investors may seek states with more favorable tax landscapes. It is also expected to impact the financial decisions of residents who rely heavily on capital gains for their income.

Summary

House Bill 747 proposes to repeal the individual income tax deduction for certain net capital gains in Louisiana, particularly those that are recognized from the sale or exchange of nonpublicly traded corporations or partnerships domiciled in the state. This legislative change aims to modify the income tax calculations for individuals, changing how capital gains are treated under the state's tax laws. The bill focuses on adjustments to existing definitions within the Louisiana tax regime, specifically impacting how tax table income is calculated for non-resident individuals, effective from January 1, 2015.

Sentiment

The sentiment surrounding HB 747 is mixed, with supporters suggesting that this repeal is a necessary step for enhancing state revenue while simplifying the tax code. They believe that removing the capital gains deduction would create a more equitable tax system. Conversely, opponents of the bill raise concerns that such a move could disincentivize investment and disproportionately affect those whose income is derived from investments rather than a salaried position. This tension reflects broader debates about tax equity and economic growth within the state.

Contention

The bill faces contention primarily regarding its implications for economic growth and tax fairness. Critics argue that repealing the deduction could undermine the economic climate for investors, particularly for small business owners and entrepreneurs who may see their tax burdens increase significantly. Proponents counter that the state must broaden its tax base to ensure equitable contributions from all sectors of the economy. The discussion around HB 747 highlights the ongoing balancing act between fostering a robust investment environment and ensuring adequate public funding through a fair tax system.