(Constitutional Amendment) Provides for the rates and brackets for purposes of calculating income taxes and repeals the deduction for federal income taxes paid for purposes of computing individual and corporate income taxes (EG NO IMPACT GF RV See Note)
The proposed changes under HB 151 would significantly alter the way state income taxes are calculated in Louisiana. By removing the federal tax deduction, taxpayers could potentially face a higher effective tax rate, which could affect their overall financial liability to the state. Additionally, by moving the authority to determine tax rates and brackets away from the constitution and into legislative law, the state legislature would gain more flexibility to adjust tax structures according to changing economic conditions and budgetary needs, thus enabling a more responsive taxation system.
House Bill 151 proposes an amendment to the Louisiana Constitution regarding the structure of income taxes in the state. This bill aims to eliminate the current allowance for taxpayers to deduct federal income taxes paid when calculating their Louisiana state income taxes. Furthermore, it seeks to establish that income tax rates and brackets must be set forth in law rather than being restricted by pre-existing constitutional limits, particularly those that were in effect as of January 1, 2003. If enacted, these changes would become applicable to all tax years beginning January 1, 2020.
The sentiment surrounding HB 151 appears to be mixed among lawmakers and constituents. Proponents argue that the removal of the deduction would create a more equitable taxation system and enhance state revenue, supporting public services and infrastructure. However, opponents express concern that this change may disproportionately affect lower and middle-income residents, who often rely on such deductions to lessen their financial burden. The debate reflects broader debates on tax policy, equity, and the role of state versus federal regulations.
Notable points of contention revolve around the potential economic impact of the elimination of federal tax deductions and the increased power granted to the legislature regarding tax rates. Critics fear that eliminating this deduction could lead to higher tax rates and financial strains on families and small businesses across Louisiana. Supporters may argue that it allows for a more modern and adaptable tax system that can better serve the state's needs in various economic climates.