Changes the month for the annual determination of the personal income tax and corporate franchise tax automatic rate reductions. (8/1/23) (EN NO IMPACT GF RV See Note)
Impact
The changes proposed in SB3 are primarily procedural, aimed at adjusting the timing of tax rate reviews rather than the rates themselves. By setting the evaluation month to January, the state aims to align the tax rate reductions with fiscal reporting periods, allowing for potentially more precise calculations. This could improve predictability for both taxpayers and state revenue forecasting, thereby contributing to better budgetary planning. However, the exact fiscal impacts will depend on the state's tax collection performance compared to previous fiscal years.
Summary
Senate Bill 3 (SB3), introduced by Senator Allain during the 2023 Regular Session, focuses on amending the processes related to automatic rate reductions for personal income tax and corporation franchise tax in Louisiana. The bill shifts the month for determining these tax rate reductions from April to January, starting January 1, 2024, and continuing each January thereafter through 2034. This legislation maintains the existing income tax brackets, ensuring that the overall tax structure remains unchanged while altering when the state's fiscal performance will trigger rate adjustments.
Sentiment
The overall sentiment towards SB3 appears to be positive among legislators, with unanimous support reflected in the Senate's vote count of 38-0 in favor. This bipartisan support indicates a general consensus on the necessity of the bill and its benefits. The procedural nature of the bill may have contributed to its smooth passage, as it does not impose new taxes or reduce existing tax revenues, leading to fewer contentions during debates.
Contention
While SB3 sailed through the legislative process, there remained some underlying concerns about potential long-term implications of moving the tax assessment period. Critics argue that changes like this can complicate the revenue forecasting process and lead to unexpected budgetary constraints down the road. Additionally, any alterations in tax policy can spark debates on the fairness of the tax system and the burden placed on different income levels, raising questions that may become more pronounced in future legislative sessions.
Repeals the automatic reduction in individual income tax rates and the corporation franchise tax rate if certain revenue thresholds are met (OR SEE FISC NOTE GF RV)
Phases-out the corporation income and franchise taxes and reduces the amount of exemptions, deductions, and credits that may be claimed to reduce corporate income and franchise tax liability (OR -$644,000,000 RV See Note)
Phases-out the corporation income and franchise taxes and reduces the amount of exemptions, deductions, and credits that may be claimed to reduce corporate income and franchise tax liability (OR DECREASE GF RV See Note)
Repeals individual income, corporate income, and corporate franchise taxes and repeals all credits, deductions, exemptions, and exclusions from the taxes (OR DECREASE GF RV See Note)