Louisiana House Bill HB639

Louisiana 2023 Regular Session

• Introduced: 4/19/23
• Refer: 4/20/23

Caption

Repeals the individual income tax deduction for net capital gains (OR INCREASE GF RV See Note)

Impact

The repeal of the net capital gains deduction is poised to have significant implications for taxpayers in Louisiana, particularly those involved in investments and financial transactions that generate capital gains. By eliminating this deduction, the state aims to adjust its fiscal policy, potentially increasing overall tax revenues. Supporters of HB 639 argue that the removal of this deduction may help in creating a more equitable tax structure, thereby benefiting the state's budget in funding essential services. However, it could also lead to increased tax burdens on individuals who rely heavily on capital gains from their investments.

Summary

House Bill 639, introduced by Representative Freiberg, seeks to repeal the individual income tax deduction for net capital gains applicable to both resident and nonresident taxpayers. This repeal affects the tax table income definitions established under Louisiana law, thereby changing how capital gains are treated in terms of state income taxation. Specifically, the proposed law states that no deductions for net capital gains shall be allowed for gains realized from transactions conducted before January 1, 2024, while allowing them for gains from installment sales that comply with the federal Internal Revenue Code. The bill is intended to take effect upon the governor's signature or the expiration of time for the bill to become law without signature, as outlined in state constitutional procedures.

Sentiment

The sentiment around HB 639 appears to be mixed among legislators and stakeholders. Proponents assert that repealing the deduction is a step toward fiscal responsibility, arguing that it will simplify the tax code and promote a more stable revenue stream for the state. In contrast, opponents, including some taxpayers and advocacy groups, express concerns that the bill could deter investments and negatively impact individuals who depend on capital gains for their financial well-being. This division highlights broader debates regarding tax policy in Louisiana and the balance between revenue generation and taxpayer support.

Contention

Notably, the contention primarily revolves around the implications of repealing the capital gains deduction. Critics warn that this move could disproportionately affect middle-income and lower-income individuals who might not have the same access to investment opportunities as wealthier taxpayers. This dynamic could further exacerbate existing inequalities in the tax system. Additionally, discussions surrounding HB 639 may evoke concerns about the state's approach to capital gains taxation relative to other states, potentially influencing residents' decisions on whether to invest or move their financial resources elsewhere.