Phases-out the corporation franchise tax over a certain period of time (OR -$397,000,000 GF RV See Note)
If enacted, HB 279 will significantly impact the revenue generated from corporate taxes in Louisiana, potentially resulting in a loss of approximately $397 million in general funds by the time the tax is fully phased out in 2027. This reduction may raise concerns about funding for public services and infrastructure, as corporate taxes contribute to state revenues. Supporters of the bill, including many business advocates, argue that eliminating this tax will encourage investment and job creation while making Louisiana more competitive in attracting businesses that might otherwise consider relocating to states with more favorable tax policies.
House Bill 279 aims to phase out the corporate franchise tax in Louisiana over a five-year period, beginning January 1, 2023. The bill proposes a gradual reduction of the tax from 80% of the current rate in the first year to 0% by 2027. Under existing laws, the corporate franchise tax is levied on domestic and foreign corporations operating in the state, calculated based on their taxable capital. The current rate is set at $1.50 per $1,000 for the first $300,000 of taxable capital and $3 per $1,000 for any amount over that threshold. The bill seeks to alleviate the financial burden on corporations by eliminating this tax altogether, which proponents argue will foster a more favorable business environment and attract new businesses to Louisiana.
The general sentiment around HB 279 appears to be largely positive among business groups and proponents of tax reform, who see it as a necessary step towards improving the business climate in Louisiana. However, there are notable concerns from fiscal conservatives and public service advocates who warn that the loss of corporate tax revenue could lead to cuts in essential services. Critics fear that while the bill may benefit large corporations, it could disproportionately affect smaller communities that depend on state funding for local programs and services, thereby raising tensions around budget allocation priorities.
Notable points of contention surrounding HB 279 include the balance between incentivizing business growth and maintaining adequate funding for public services. Opponents of the bill express concerns about the dependency on corporate taxes as a reliable revenue source and are wary of the potential long-term implications of tax cuts on the state's fiscal health. Additionally, the bill's effectiveness and the true extent of its economic benefits are debated, with some skeptics arguing that the supposed growth in business activity may not sufficiently compensate for the drastic reduction in tax revenue. The bill would require a significant constitutional amendment, adding another layer of complexity to its passage and implementation.