Louisiana House Bill HCSR7

Louisiana 2011 Regular Session

Caption

Requests the House Committee on Ways and Means and Senate Committee on Revenue and Fiscal Affairs to study the cost and benefit to the state of tax credits authorized for insurance companies to invest their cash reserves in Louisiana banks and other investments

Impact

The bill requests an in-depth analysis of the financial implications these tax credits have on the state's budget. With the corporation income tax credit and the premium tax credit costing the state over $180 million annually, lawmakers are concerned about whether the benefits for the state from these substantial tax breaks are justified. It asks for clear answers regarding the actual advantages these tax credits bring to the local economy, particularly in terms of infrastructure investment and support to local banking institutions.

Summary

HCSR7 is a legislative request aimed at studying the cost and benefit of tax credits provided to insurance companies that invest their cash reserves in Louisiana financial institutions. Specifically, it calls upon the House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs to function as a joint committee to evaluate the impact of these tax incentives. The bill emphasizes the significant tax liability reductions that insurance companies can achieve, allowing them to effectively pay a mere 5% of their potential tax obligations. This favorable tax environment raises questions about fairness and equity among different industries and taxpayers in Louisiana.

Sentiment

The general sentiment surrounding HCSR7 appears to be cautious and inquisitive. Supporters of the study argue that a thorough investigation could lead to reforms that optimize the current tax credit system, ensuring that state resources are used effectively. However, there is concern about how such a study may uncover disparities in the treatment of industries, potentially igniting further debate over tax policies and their implications on various sectors within Louisiana.

Contention

Notable points of contention in discussions around HCSR7 center on the fairness of granting extensive tax credits to the insurance industry compared to other sectors. Critics argue that this uneven treatment undermines the integrity of the state's tax system, while supporters maintain that these incentives are necessary to encourage investment in local financial institutions. The outcome of the study requested by HCSR7 may lead to calls for adjustments in tax policy that could ripple across the legislative landscape.