Provides relative to the definition of "tax table income" for resident individuals for purposes of calculating income tax
Impact
By broadening the definition of tax table income to include capital gains from a wider range of business structures, the bill is likely to impact how individual income is calculated for state tax purposes. This could affect many investors, as it allows for greater deductions on earnings from capital gains. The alteration is set to take effect on July 1, 2012, which will apply to tax years starting from January 1, 2013. The bill aligns with similar initiatives aiming to create a more favorable tax environment for individuals engaged in investing in local businesses.
Summary
House Bill 1042 aims to amend the definition of 'tax table income' for resident individuals in the state of Louisiana, adjusting the criteria for what constitutes taxable income within the framework of the state's income tax law. The bill specifically alters the current definition by expanding the inclusion of income from capital gains to encompass gains arising from the sale or exchange of equity interests in both publicly held and privately traded corporations. This change reflects an effort to streamline the tax code and potentially provide relief to individual taxpayers engaged in certain investment activities within the state.
Sentiment
The general sentiment surrounding HB 1042 appears to be supportive among those who would benefit from the proposed tax adjustments, particularly individual investors and business owners who find the current tax regulations limiting. By facilitating easier access to capital gains deductions, proponents argue that the bill encourages investment and economic growth within the state. However, discussions around the bill also suggest a cautious outlook from some stakeholders who fear that the changes might complicate tax calculations or lead to potential inequities in the treatment of different types of income.
Contention
One notable point of contention relates to the implications of expanding the definition of taxable income. Critics may argue that while the bill seeks to simplify tax obligations for some individuals, it could potentially lead to disparities in tax burdens among different income groups. There is a concern that the extensive allowances for capital gains could favor wealthier individuals who are more likely to possess substantial investments. Additionally, opponents may worry about the long-term effects of altering established tax definitions, calling for a more measured approach to tax reform that considers the diverse impacts on the state's overall fiscal health.
Provides for a flat rate for purposes of calculating income tax for individuals, estates, and trusts, increases the standard deduction, and modifies or repeals certain income tax deductions and credits (Item #5 and 6) (RE1 DECREASE GF RV See Note)
Excludes qualified deposits in ABLE Accounts from "tax table income" for purposes of calculating individual income tax (EG SEE FISC NOTE GF RV See Note)
Repeals the state income tax deduction for federal income taxes paid for purposes of calculating individual and corporate income taxes (Item #17) (OR +$374,000,000 GF RV See Note)