Limits claims for credit against individual income tax, corporate income tax, or corporate franchise tax on tax returns filed for a calendar year to 15% of the general fund revenues for the fiscal year. (7/1/15)
The impact of SB 277 on state tax law is significant as it introduces a cap on tax credits that can be claimed each year by taxpayers. This limit aims to enhance budget predictability for state finances, as businesses and individuals would need to adjust their expectations regarding available tax credits. By formalizing this limit, the bill seeks to prevent an overload of credit claims that could threaten the state’s budget stability or lead to excessive fiscal deficits attributed to unclear tax credit obligations.
Senate Bill 277 is a legislative proposal designed to implement limitations on claims for tax credits against individual income tax, corporate income tax, or corporate franchise tax. Specifically, the bill mandates that the total amount of tax credit claims accepted by the Department of Revenue for any given tax year cannot exceed 15% of the general fund revenues for that fiscal year. The proposed measure is intended to establish a more structured approach to tax credits and ensure fiscal prudence in tax collection and distribution. The law is set to take effect on July 1, 2015, pending any veto or approval steps from the governor and legislature.
The sentiment surrounding SB 277 appears to be mixed. Proponents of the bill likely view it favorably as a necessary measure to control state expenditures and promote responsible fiscal management. However, some stakeholders may express concerns regarding the implications of capping tax credits, as this could limit incentives for businesses and individuals who rely on such credits for financial relief. The overall discourse reflects differing perspectives on fiscal policy and the balance between encouraging economic growth through tax incentives and maintaining a stable revenue base for the state.
Notable points of contention may arise from various stakeholders, especially those in the business community who fear that imposing a tax credit cap might deter investment or reduce cash flow benefits that are typically associated with tax incentives. Some legislators may argue that the stringent limitation on credits could undermine efforts to stimulate economic growth, particularly in key industries affected by tax incentives. The debate hinges on the essential need for the state to maintain its fiscal health while also supporting economic initiatives that provide benefits to residents and the larger community.