Louisiana Senate Bill SB93

Louisiana 2019 Regular Session

• Introduced: 3/27/19
• Refer: 3/27/19
• Refer: 4/8/19

Caption

Provides a flat corporation income tax rate and eliminates the usage of certain tax credits against corporation income tax. (gov sig) (OR -$144,000,000 GF RV See Note)

Impact

In addition to altering the tax rate, SB 93 also eliminates the use of various tax credits against corporate income tax liabilities. Specifically, it prohibits corporate taxpayers from applying certain existing tax credits, including those related to insurance, manufacturing, and research and development, to offset their income tax. This change is aimed at increasing state revenue from corporate taxes but is likely to be controversial as it strips away incentives that some businesses may rely on.

Summary

Senate Bill 93, introduced by Senator Ward, proposes a significant overhaul of the corporate income tax system in Louisiana by establishing a flat corporate income tax rate of 3.95%. This flat rate replaces the existing graduated tax brackets, which ranged from 4% to 8% based on income levels. The intention behind this reform is to simplify the tax structure and potentially attract more businesses to the state, as a flat tax is often perceived as easier to navigate for corporate entities.

Sentiment

The discussions surrounding SB 93 have reflected a polarized sentiment among legislators and stakeholders. Proponents argue that transitioning to a flat corporate income tax rate can streamline tax compliance and is a necessary step to enhance the state’s competitiveness in attracting and retaining businesses. However, opponents of the bill express concerns that the removal of tax credits could disincentivize investments and economic development initiatives, especially in sectors that have previously benefitted from such credits.

Contention

Notable points of contention include the potential impacts on economic growth and investment. Opponents worry that reducing tax relief options for corporations could lead to decreased funding for projects that create jobs and stimulate local economies. The debates are further complicated by discussions around how the bill may affect different industries, particularly those that rely heavily on the previously available credits. Moving forward, the success of SB 93 will hinge on the balance it achieves between generating revenue for the state and fostering a business-friendly environment.