Louisiana House Bill HB356

Louisiana 2017 Regular Session

• Introduced: 3/31/17
• Refer: 3/31/17
• Refer: 4/10/17
• Refer: 5/8/17
• Refer: 5/9/17
• Engrossed: 5/24/17
• Refer: 5/30/17

Caption

(Constitutional Amendment) Provides for flat income tax rates and eliminates the income tax deduction for federal income taxes paid for purposes of calculating corporate income tax liability (RE SEE FISC NOTE See Note)

Impact

The implementation of HB356 would dramatically alter the landscape of state taxation in Louisiana. By transitioning to flat income tax rates, the state aims to create a more uniform tax structure that could streamline tax preparation for businesses and individual taxpayers alike. However, this raises concerns about the effect on lower-income earners, as a flat tax may not account for the varying abilities of taxpayers to pay relative to their income levels. Conversely, supporters believe it could spur economic growth by attracting businesses looking for simpler tax compliance requirements.

Summary

House Bill 356 (HB356) proposes a constitutional amendment aimed at restructuring the income tax system in Louisiana by instituting flat income tax rates for both individuals and corporations. The amendment seeks to eliminate the deduction for federal income taxes paid when calculating corporate income tax, thereby simplifying the tax code and potentially increasing state revenue. This change is seen as a significant shift from the current graduated tax structure, which has been in place since at least January 1, 2003, allowing for a more predictable and potentially equitable taxation framework.

Sentiment

The debate surrounding HB356 has elicited mixed sentiments among lawmakers and constituents. Proponents advocate for the bill as a means to foster a business-friendly environment and reduce bureaucratic obstacles associated with current tax regulations. On the other hand, critics voice concerns about potential regressivity, suggesting that such a tax system could disproportionately affect low- and middle-income residents who spend a larger share of their income on taxes compared to wealthier individuals. The issues of fairness and economic impact remain central to discussions on this bill.

Contention

Notable points of contention regarding HB356 include the treatment of federal income tax deductibility and its implications for corporate responsibility in state funding. Critics argue that eliminating federal tax deduction can lead to increased burdens on businesses and diminish the incentive structures set by the federal government. Additionally, the effectiveness and timing of the proposed flat tax—set to take effect on January 1, 2018—contingent on the passage of other related bills has created further debate about legislative priorities and fiscal planning within Louisiana's broader budgetary context.