Louisiana House Bill HB31

Louisiana 2019 Regular Session

• Introduced: 2/26/19
• Refer: 2/26/19
• Refer: 4/8/19

Caption

Phases out the corporate franchise tax over a 5-year period (OR -$377,000,000 GF RV See Note)

Impact

The bill's passage would fundamentally alter the state's approach to taxation for corporations, essentially abolishing the franchise tax. Currently, corporations are taxed at rates of $1.50 per $1,000 of taxable capital, up to $300,000, and $3 per $1,000 for capital above that threshold. With HB31, these rates would gradually decline until no tax is assessed, which proponents argue could lead to increased business investment and job creation within the state.

Summary

House Bill 31 aims to phase out the corporate franchise tax in Louisiana over a five-year period, beginning with tax year 2020. The current law levies a tax on domestic and foreign corporations doing business in the state, calculated based on their taxable capital. HB31 proposes a systematic reduction in the tax rate, decreasing it by 20% each year until it is completely eliminated by 2024. This significant shift is expected to ease the tax burden on businesses operating in Louisiana and promote economic growth by making the state more attractive to corporations.

Sentiment

The sentiment among lawmakers and the business community regarding HB31 is predominantly positive. Supporters argue that eliminating the corporate franchise tax is a crucial step in fostering a more business-friendly environment. They believe that this will not only retain existing businesses but also attract new companies to Louisiana. However, there may be caution regarding the potential loss of state revenue that could result from this tax reduction.

Contention

Despite the favorable sentiment, some concerns have been raised regarding the implications of this tax phase-out. Critics argue that the reduction of corporate taxes might lead to diminished state revenue, impacting funding for essential public services. They emphasize the need to balance economic incentives with the state's financial responsibilities. The debate surrounding HB31 highlights an ongoing tension between promoting economic development through tax relief and ensuring adequate funding for public services.