Louisiana House Bill HB349

Louisiana 2017 Regular Session

• Introduced: 3/31/17
• Refer: 3/31/17
• Refer: 4/10/17

Caption

(Constitutional Amendment) Provides for the rates and brackets for purposes of calculating individual income tax and repeals the deduction for federal income taxes paid (OR SEE FISC NOTE See Note)

Impact

If passed, HB 349 would fundamentally change how individual income taxes are calculated in Louisiana. By eliminating the deduction for federal income taxes, individuals may see an increase in their state tax liability, depending on their income levels. Furthermore, the repeal of the constitutional limits on tax brackets means that lawmakers would potentially have more authority to adjust tax rates, which could lead to either lower or higher rates in the future depending on legislative decisions and economic conditions. This flexibility is aimed at better aligning state tax policy with the state's fiscal needs.

Summary

House Bill 349 proposes a constitutional amendment regarding the state income tax structure in Louisiana. The bill aims to eliminate the deduction for federal income taxes paid when calculating state individual income taxes. It also seeks to remove the existing constitutional limit on the rates and brackets for individual income taxes, allowing these to be set by law instead. The intended effect of this amendment is to provide greater flexibility in the state's tax system and potentially to allow for more significant adjustments to tax rates in response to economic conditions.

Sentiment

The sentiment surrounding HB 349 appears to be mixed. Proponents argue that the bill provides necessary updates to the tax code and may contribute to a more equitable tax system by removing the federal tax deduction. They contend that the bill could lead to improvements in state revenue without disproportionately affecting low- and middle-income taxpayers. On the contrary, opponents express concern about the potential for increased tax burdens on individuals, particularly those who may already struggle with state taxation. There are fears that by lifting restrictions on tax rates, lawmakers could impose higher rates in the future.

Contention

A significant point of contention with HB 349 stems from the perceived risks associated with eliminating the federal income tax deduction and removing constitutional constraints on tax rates. Critics argue that the change could lead to unpredictability in taxation, as future legislatures may choose to set rates significantly higher than before, potentially hurting taxpayers. Additionally, the amendment's reliance on voter approval suggests a level of uncertainty in public support, as constituents may be wary of any proposal seen as raising their tax liabilities. Thus, the bill reflects broader tensions regarding tax policy and fiscal governance in Louisiana.