Increases the amount of the earned income tax credit (OR -$66,900,000 GF RV See Note)
The proposed law aims to provide relief to low-income earners, making it more advantageous for individuals and families to file their taxes and claim the EITC. By increasing the state's EITC, the bill is expected to inject additional funds into the local economy, enhancing consumer spending and supporting various community services that rely on a healthy economy. Furthermore, the bill is applicable to all taxable years beginning on or after January 1, 2023, and remains effective until 2030, giving it a substantial impact on the state's fiscal landscape over the next several years.
House Bill 162, proposed by Representative Willard, seeks to amend Louisiana's income tax laws by increasing the state's earned income tax credit (EITC) from 5% to 10% of the federal earned income tax credit through December 31, 2030. This legislation is designed to provide greater financial relief to low-income working families by allowing them to retain a larger portion of their earned income through tax refunds. The increase is significant as it doubles the current percentage, potentially impacting the economic well-being of many households in Louisiana.
The sentiment surrounding HB 162 appears to be largely positive among proponents, as increasing the EITC is generally viewed as a progressive step towards alleviating poverty and supporting working families. Advocates for the bill argue that it addresses economic disparities faced by low-income residents and promotes equity in the state's tax system. However, there may be concerns among fiscal conservatives regarding the potential budgetary impacts of increasing tax credits, leading to a more restrained view of the bill from that perspective.
One notable point of contention centers around the fiscal implications of the bill, as increasing the EITC could lead to an estimated loss of $66,900,000 in general fund revenue. Critics may argue that such a decrease in revenue could affect state funding for other essential services. This concern highlights the ongoing debate over tax policy and the balance between providing tax relief for citizens and maintaining adequate funding for state programs and services.