Provides relative to the state taxation of corporations (Items #3 and 19) (OR DECREASE GF RV See Note)
Impact
If enacted, HB 50 would phase out the corporation franchise tax over a five-year period, culminating in no franchise tax being assessed or paid starting January 1, 2021. This measure could possibly lead to increased capital flows in the state as it lowers costs for businesses. Additionally, the proposed bill caps the amount of corporate income tax liability that can be reduced by available tax credits, ensuring that firms pay a minimum amount in corporate income tax, thereby safeguarding state revenue.
Summary
House Bill 50 proposes significant changes to the state taxation framework for corporations in Louisiana, introducing a flat tax rate of 5% on Louisiana taxable income. This bill eliminates the existing tiered tax rate system, which at times taxed income at rates ranging from 4% to 8%. By simplifying the tax structure, the bill aims to create a more straightforward and predictable tax environment for corporations operating within the state. This move is seen as a way to enhance the business climate in Louisiana and attract new investments.
Sentiment
The sentiment surrounding HB 50 appears to be largely supportive among business communities who view the flat tax rate and the elimination of the franchise tax as beneficial for economic growth. Advocates argue that a simpler tax structure will relieve financial burdens on businesses and stimulate economic activity. However, concerns have been raised by some lawmakers regarding the potential loss of revenue for state services and programs that could arise from such tax cuts.
Contention
Notable contentions around HB 50 include discussions about the balance between fostering a business-friendly environment and ensuring adequate state revenue for essential services. Critics of the bill express concern that reducing corporate taxes may disproportionately favor larger corporations while failing to provide substantial benefits to smaller businesses. The dialogue emphasizes the ongoing debate about the role of taxation in economic development, reflecting a split between those who prioritize corporate tax relief and those who advocate for maintaining a robust tax base to fund public services.
Phases-out the corporation income and franchise taxes and reduces the amount of exemptions, deductions, and credits that may be claimed to reduce corporate income and franchise tax liability (OR DECREASE GF RV See Note)
Levies a flat corporate income tax, repeals the corporation franchise tax, repeals deductibility of federal income taxes paid, and terminates certain income tax credits (OR DECREASE GF RV See Note)
Phases-out the corporation income and franchise taxes and reduces the amount of exemptions, deductions, and credits that may be claimed to reduce corporate income and franchise tax liability (OR DECREASE GF RV See Note)
Requests that the Dept. of Children and Family Services study out-of-state expenditures of Louisiana-issued Supplemental Nutrition Assistance Program benefits in order to identify fraud