Provides relative to the apportionment ratio for purposes of computing corporate income tax and provides for the sourcing of sales (Item #44)
Impact
Passing HB 12 will lead to significant modifications in how corporations, especially in the transportation sector, calculate their taxable income. The incorporation of a single ratio formula could streamline the process for many businesses, thus reducing the administrative burden associated with complying with tax regulations. However, this transition might also lead to a decrease in tax revenue temporarily as companies adjust to the new rules, raising concerns among legislators about the long-term fiscal implications for state coffers.
Summary
House Bill 12 seeks to modify the way corporate income tax is computed in Louisiana, specifically addressing the apportionment ratio for income derived from transportation and service industries. The bill proposes a shift from the current method of calculating apportionable income, which averages multiple ratios based on property value and source of income, to a simplified approach that relies solely on the ratio of income derived from Louisiana sources to total income. This change is aimed at providing clearer guidelines for businesses operating in Louisiana and ensuring that the state's taxation system remains competitive and fair for those industries heavily reliant on transportation and services.
Sentiment
The general sentiment surrounding the bill reflects a mixture of support and skepticism. Advocates, particularly those within affected industries, argue that simplifying the tax calculation will facilitate better business operations and promote economic growth by clarifying tax obligations. Conversely, opponents, including fiscal watchdogs, express concern over potential revenue losses for the state and caution against altering established tax structures without thorough analysis and public input.
Contention
Notably, a point of contention arises from the perceived benefits versus the economic risks associated with the bill's enactment. Critics highlight the possibility that the shift in calculation could disproportionately favor larger corporations that can better absorb the changes, potentially undermining smaller local enterprises. This debate extends to the equity of tax burdens among various business sectors, questioning whether the bill truly serves the broader public interest or primarily benefits a select few.
Provides relative to the apportionment ratio for purposes of computing corporate income tax and provides for the sourcing of sales (Item #44) (EN INCREASE GF RV See Note)
Establishes the Corporate Tax Apportionment Program for the granting of contracts for certain businesses to utilize the single sales factor to compute their taxable for income tax purposes and their taxable capital for franchise tax purposes. (7/1/12) (EG DECREASE GF RV See Note)
Levies a flat tax on corporations and eliminates the deduction for federal income taxes paid for purposes of computing corporate income taxes (OR -$58,000,000 GF RV See Note)
Repeals the corporate income tax and franchise taxes and prohibits certain corporate taxpayers from claiming certain refundable tax credits (Items #43 & 44) (OR DECREASE GF RV See Note)
Provides relative to the apportionment ratio for purposes of computing corporate income tax and provides for the sourcing of sales (Item #44) (EN INCREASE GF RV See Note)