Louisiana House Bill HB418

Louisiana 2017 Regular Session

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

Caption

Eliminates the deductibility of federal income taxes paid for purposes of calculating state individual income tax

Impact

The repeal of the federal income tax deduction is significant as it directly affects how much individuals must pay in state taxes. By removing this deduction, taxpayers could face increased financial burdens, especially those with higher federal tax liabilities. The implications of this bill extend to state revenue as well, potentially increasing the amount collected through individual income taxes by broadening the tax base without an increase in tax rates.

Summary

House Bill 418 aims to eliminate the state-level deductibility of federal income taxes when calculating individual income taxes in Louisiana. This change would repeal the statutory provisions that currently allow taxpayers to deduct federal income taxes paid from their taxable income for state income tax purposes. The bill stipulates that this provision will be applicable for all taxable periods beginning on and after January 1, 2018, contingent upon an amendment to the state's constitution being approved in a statewide election.

Sentiment

The sentiment surrounding HB 418 appears to be mixed among legislators and stakeholders. Supporters argue that by removing this deduction, the state could streamline its tax system, leading to greater fairness and potentially increasing funds available for public services. Conversely, opponents express concern that eliminating the deduction could disproportionately affect lower and middle-income residents, leading to increased tax burdens in an already challenging economic climate.

Contention

Notable points of contention arise regarding tax equity and the potential impacts on different socio-economic groups. Advocates for low-income households worry that the absence of federal tax deductibility could widen income disparity, as wealthier individuals would still benefit from other forms of tax relief. The debate around HB 418 raises critical questions about state fiscal policy priorities and the balance between revenue generation and taxpayer relief.