Louisiana House Bill HB373

Louisiana 2017 Regular Session

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

Caption

Limits application of the individual income tax deduction for excess federal itemized personal deductions (OR +$305,700,000 GF RV See Note)

Impact

The proposed limitations on deductions could generate additional state revenue by reducing the amount taxpayers can claim, especially affecting higher-income individuals who typically exceed these thresholds. Proponents argue that it can help funnel more funds into state services essential for public welfare, while opponents suggest it may disproportionately burden charitable giving among wealthy individuals. As these deductions often incentivize philanthropy, the implications on nonprofit organizations may be significant, creating a potentially adverse impact on charitable contributions across the state.

Summary

House Bill 373 aims to amend the individual income tax laws in Louisiana by limiting the deductions available for excess federal itemized personal deductions. Specifically, the bill sets caps on how much individuals can deduct from their state income taxes based on charitable contributions that exceed a specified threshold. For single filers, the limit is set at $12,500, while for joint filers, it is $25,000. This change applies to all tax years starting January 1, 2018, indicating a significant shift in the tax landscape for Louisiana residents, particularly those who itemize their federal deductions.

Sentiment

The overall sentiment surrounding HB 373 appears to be mixed. Supporters, largely within the Republican caucus, tend to endorse the bill as a necessary measure for tax reform that would allow the state to manage its revenue more effectively. Conversely, critics, primarily from the Democratic side, express concerns regarding the potential decline in charitable donations and the loss of benefits for those who typically rely on these deductions. The discussion around the bill thus reflects broader debates about taxation and the responsibilities of government versus individual contributions to society.

Contention

Key points of contention regarding HB 373 center on the balance between state revenue needs and the encouragement of charitable activities. Detractors argue that by limiting deductions, the state may inadvertently dissuade individuals from contributing to charities quite significantly, thereby impacting various organizations reliant on these contributions for their survival. The bill also raises questions about fairness and equity in the tax system—whether the state should limit such benefits, notably in times of economic uncertainty, or whether it has a responsibility to support charitable giving as part of its fiscal strategy.