Louisiana House Bill HB50

Louisiana 2016 1st Special Session

• Introduced: 2/14/16
• Refer: 2/14/16

Caption

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.